According to the Fair Debt Collection Practices Act, a consumer debt is any debt that arises out of a transaction by a consumer to secure goods, services, insurance or property through the use of a payment plan. This, while very general, simply states that all purchases that are made by credit, including doctor visits where you pay later, are covered under the act and extend protection to the consumer.

Many bill collectors falsely represent this information stating that not all debts are covered under the act and that they, in fact, do not have to comply with the laws. As a private consumer you should be aware that this is absolutely false. All private held debt, secured or unsecured, that was placed on a payment plan is covered under this Act. This also relates to interest and non-interest bearing accounts. Once an agreement has been made between two parties to exchange a good or service for future payments the debt is covered.

A debt relief counselor will explain to you that once you have secured their services, in accordance with the act, creditors must stop the harassing phone calls and letters. They will also inform you that as your representative they can negotiate a debt solution program with these same creditors, ending all your debt problems.

Bill collectors can be very nasty to deal with. Many times your reluctance to repay a debt simply may stem from the poor treatment you have received from the collector. While these abusive practices still happen, despite the Fair Debt Collection Practices Act, you can find debt relief with a debt solutions company. You can take back control of your finances. You do not have to remain hostage to bill collectors and harassment. It is simply a choice to find the help you need with a debt counselor and take advantage of that help.

Other debt management services will reach an agreement with creditors in order to get rid of a percentage of the debt. The entire goal is to avoid bankruptcy; which is the only way to stop creditors from trying to get debt owed by garnishing paychecks and taking assets and property.

Credit card relief services have a somewhat checkered past. Some investigating agencies have noted abuse from such services. Some financial investors argue that debt settlement services end up steering the consumer away from filing bankruptcy, when in reality they might saved more money if they go this route.

The federal bankruptcy reform which was put into effect in 2005, has somewhat changed the way these services are handled. If an individual wants to file for Chapter 7 bankruptcy,they will need to prove that they have sought help from debt education and credit counseling services.

A debt settlement attorney will usually follow the rules of this legislation that was passed in 2005. According to the UDMSA, providing services is split into three basic parts; service-debtors agreements, registration of services and enforcement.

A debt settlement attorney will make sure that certain rules are enforced. They also look for misuse of funds in trust or any other type of abuse (such as the creditor settling for more than 50% of a debt without the debtors knowledge). This is extremely important when it comes to credit card debt.

There are certain financial institutions that are not required to follow the Uniform Act, such as the banks. The UDMSA is an essential part of the law when it comes to regulating debt settlement services.

How will the new Bankruptcy Laws affect Debt settlement? Consumers wonder, how willing will creditors be to negotiate any kind of a deal to settle debt now? Are they still going to be accepting the lump sum offers that they were once willing to negotiate with their customers?

Of course they will, the credit card banks had millions of dollars at their disposal that they lobbied with to attempt to get the new law passed. Why not, it was going to benefit them. They felt that bankruptcy was an easy way out and it was being abused by the upper class to get out of paying back their debt. Even though research can prove this not to be the case and the facts speak for themselves. From 1995-2004, while bankruptcy cases doubled, credit card profits tripled. Credit card companies target individuals that they know cannot afford to repay the loans, thus adding to the bankruptcy figures. More than half of the bankruptcies filed are because of medical bills that have piled up due to lack of insurance or loss wages. The income range for people filing is somewhere around $25,000.00. This does not point to the upper class trying to take the easy way out of their debt. Divorced woman, Hispanic and African American couples have the highest percentages of bankruptcies filed a year.

In a nutshell, this new law will profit the credit card companies more than anyone else; it will be business as always for them. Collections will continue, people who cannot afford to pay will continue to try and juggle one bill to pay another; inevitably getting into more debt trying to get out of debt. Hard working honest people will continue to be hit the hardest by both the new bankruptcy law that at once gave them some relief when they had reached the end of their rope, and the credit card companies also. Credit Card companies will still try to bully and force people into paying up, sometimes in a very rude manner, but when all is said and done, they are still going to make a deal.

The steps that are taken in a debt management program are as follows.

1. Assessment: The company will assess your financial situation and all your outstanding debt. This is done to find out how much you will be able to pay comfortably towards your debts every month.

2. Negotiation: Once the amount that you will pay every month is determined, the company approaches your creditors to negotiate lower interest rates and reduce your payments. Most creditors will help you, as they run the risk of not getting paid at all in case you file for bankruptcy.

3. Distribution: You then have to make the single monthly payment to the company and they distribute it among your creditors. Thus, you do not have to pay every individual creditor separately, you pay only one amount to the company and the rest is taken care of by them.

4. Renegotiation: In case you face any difficulties during the program you can contact the company. If your financial situation changes, then the programs are flexible enough to accommodate and renegotiate payments on behalf of you.

5. Review: Your debt management plan will be reviewed by the company at regular intervals. This is done to check if the plan is actually being effective in your case and reaping any benefits for you.

Positive effects of debt consolidation
A credit score depends on how many different accounts, have outstanding balances. As debt consolidation combines all your outstanding balances into one, it improves your credit score, thus, improving your credit report. A positive effect that consolidation will have on the credit report is that many accounts will appear to be paid off. If you repay your new credit timely then that too will have a positive effect on your credit report in the longer run. When you consolidate your debt you pay a fixed monthly amount to your debt consolidation company which is then distributed among your creditors. Thus, your creditors receive payments every month, this definitely leads to improvements in the credit report.

Negative effects of debt consolidation
It is not debt consolidation that directly affects your credit report negatively but your actions after debt consolidation. Like, missing a payment could affect your credit report very badly. You must make sure that you make your monthly payments on time along with other credit payments, otherwise your credit score will drop, affecting your credit report adversely. You must also remember that closing credit accounts after debt consolidation can also impact your score negatively. So you must not close your oldest accounts.

Because chapter 7 bankruptcy law does not require the construction of a repayment plan, it allows for less flexibility than other forms of bankruptcy. However, there are certain aspects that need to be considered in order to retain the largest amount of assets as well as the least amount of debt after a chapter 7 bankruptcy. First of all, it is important to realize that you, as the chapter 7 bankruptcy filer, are asking the courts to discharge you of your debts at the cost of your creditors.

In order to attain this discharge, you will have to meet as many of your responsibilities as possible. These include full disclosure of your financial and legal situation in your  petition, as well as full cooperation during the liquidation of your assets. Furthermore, there are certain debts you are not allowed to discharge in a chapter 7 bankruptcy. These include certain tax debts, child support, government fines and student loans.

You will still be obligated to pay these debts after your chapter 7 bankruptcy. Fortunately, there are not only obligations in a chapter 7 bankruptcy, but also certain exemptions. Exemptions are assets that will not be included as part of the liquidation process. Chapter 7 bankruptcy exemptions vary from state to state, and can include such assets as property, vehicles, work-related assets and IRAs.

It is always of the utmost importance to understand which exemptions may apply to your situation and how to include them in you chapter 7 bankruptcy petition. If you are filing chapter 7 bankruptcy, it is always in your best interest to consult with a qualified and experienced personal bankruptcy lawyer to find out exactly which rules apply to your situation, and if there is room for any amount of flexibility.

Debt Settlement Consumer Protection Act
The debt settlement consumer protection act according to the Library of congress prohibits debt settlement providers from receiving a fee for their services without providing a written contract specifically stating what the consumer is paying for and why. This Act can apply to loans, offers of credit, mortgages, and 3rdparty compensation ad purchasing debts. The providers can charge an enrollment fee or a settlement fee and that is it.

The law states that a debt settlement provider has to hold any funds given to them by the consumer in a trust account that is not affiliated with the company in any way. The law also states that the consumer can cancel their contract at any time in accordance with the agreements stated in their contract. If a debt settlement provider does not comply with these rules that civil action can and will be brought against them in federal court.

Conclusion
Consumers have been taken advantage of for years and the amendment that has been made to the Protection act in 2010 has made it possible for consumers to feel better about applying for loans and fixing their credit issues without worrying that they will loose money in the process. The economy has suffered enormously due to the foreclosures and employment downsizing and there are so many businesses out there that are trying to take advantage of consumers to make a quick dollar, but hopefully with this act in place the ability of these agencies to defraud the consumer are few and far between. If any consumer feels that they have been defrauded they can bring a suit against the provider and hopefully they will be brought to justice. The best thing a consumer can do before applying for anything is to do the research and make sure the agency is legitimate and experienced.

The fair debt collection law attempts to put an end to behavior that is considered abusive and deceptive. There are many actions that are covered under the act, some of the actions that are covered include:

» Acceptable hours to contact a person by phone. Debt collectors can only contact consumers between the hours of 8:00 a.m. and 9:00 p.m. local time.

» Failure to stop communication upon request of consumer. Debt collectors who receive written notice that a consumer does not want to be contacted any more or refuses to pay the debt may not contact the person any more according to the fair debt collections law. An exception to the rule is for litigation being served to the consumer.

» Calling a house only to ring the phone or engaging a person in conversation over the phone repeatedly. Any behavior that is intended to annoy, abuse, or harass is prohibited in fair debt collection law.

» Debt collectors are not allowed to publish a consumers name or address on any list that is a collection of bad debts.

These are just some of the practices that are prohibited under the Fair Debt Collections Law. There are many more actions that are covered in great depth to prevent the abuse and deception of the consumer.

The act also sets Guidelines for Debt Collectors. The required conduct must be followed by all debt collectors when dealing with consumers. The guidelines are as follows:

♦ Debt collectors must identify themselves, and make the consumer aware in every conversation that they are a debt collector.

♦ Debt collectors must provide the name and address of the original creditor only after the consumer has filed a written request. This must be fulfilled within 30 days.

♦ Make consumers aware of their right to dispute a debt, either in full or part.

♦ Provide verification of the debt. If the consumer files a written request for verification the debt collectors must mail the consumer all relevant information, or stop collection efforts.

♦ If a debt collector files a lawsuit it must be where the consumer lives, or where the consumer signed the contract.

Again this is only an overview of the required conduct of all debt collectors. The Fair Debt Collections Act has many more items all debt collectors must follow. The Fair Debt Collection Practices Act of 1978 provides consumers in debt protection from debt collectors attempting to harass and deceive the consumer. It is a powerful and important statute added to the Consumer Credit Protection Act.

Another reason why new debt settlement laws have caused more consumers to turn to debt settlement is that an increasing number of states are changing their debt settlement laws to protect the consumer. In the past, debt settlement laws didn’t offer consumers enough protection and an alarming amount of consumers have recently reported they were victims of fraudulent debt settlement practices. Certain new state-defined debt settlement laws place restrictions on previously un-legislated aspects of debt settlement.

A key aspect of the new debt settlement laws is that the state places a limit on how much a debt settlement company can charge a consumer for its services. According to these debt settlement laws, a debt settlement company may only charge a maximum of 15% of the amount by which a client’s debt is reduced, thus reducing exorbitant fees charged by disreputable debt settlement companies. Another important aspect of the new debt settlement laws is that in some states, all practicing debt settlement companies are required to register with the state’s Attorney General. It is evident, with new debt settlement laws, debt settlement has become safer for consumers seeking to end their debts.