The CARD Act, as we discussed last week here on our Long Island bankruptcy law blog, made a number of changes intended to protect consumers. It significantly restricted the tactics that companies can use against borrowers with credit card debt. Some practices are no longer permitted at all.
Many Long Island residents struggling with debt feel as if credit card companies have all the power. And for a long time, it's true, their power ran virtually unchecked.
Overwhelming debt can arise from many sources including unexpected medical bills or auto repair costs, the loss of employment and inability to keep up with payments, or even simply overspending through the use of credit cards. Credit cards can be one of the easiest traps to fall into as many consumers fail to comprehend the significant interest rates they may be agreeing to pay.
One of the most common ways for Long Island, New York, residents to get into debt is by overusing or overextending themselves with credit cards. In an effort to help consumers avoid or ease these potential problems, as well as prevent card companies from abusing card holders, in 2009 Congress enacted the Credit Card Accountability Responsibility and Disclosure Act, also referred to as the CARD Act. Consumers unfamiliar with the law may wonder how it protects them and what rights they are granted under the CARD Act.
A credit card is more than a little lump of plastic in a Long Island resident's wallet. It is a tool that allows the holder to access spending power that the person might not be able to attain with his own monetary resources. Although a credit card can give a person an economic boost over the short-term, anything that the spender chooses to charge to his card will eventually have to be paid off.
Consumers who have racked up an overwhelming amount of credit card debt, regardless of the reason, may feel that they have minimal options for their situation. However, there are various debt solutions to assist people in such a situation, but it is important to keep in mind that not every option will serve the consumer's best interests.
Many Americans have debt in some form, whether it is a mortgage, an automobile loan, a student loan or credit card debt. Although a great number of people view debt as unavoidable, it is generally understood that there are good types of debt and bad types of debt. Credit card debt, because of the expenses related to interest charges and fees and the potential for creditor harassment, is often classified as bad debt.
When consumers begin to struggle under significant credit card debt, they often feel powerless against the credit card companies. However, there are certain laws that specifically limit certain actions by credit card companies and impose specific duties. One of the primary laws that protect users of credit cards is the Credit CARD (Card Accountability Responsibility and Disclosure) Act that was passed in 2009. All of the provisions contained in the Act are now in effect.
Credit cards can be a great financial tool for New York residents who need to make a large purchase or cover the expenses associated with an unexpected emergency. Unfortunately, however, credit card debt can quickly snowball, creating significant financial hardships for consumers. Many people struggling with high levels of credit card debt face creditor harassment, late fees and interest rates that can make paying off a balance seem impossible. In some cases, extreme levels of credit card debt can lead to filing for bankruptcy.
When people find themselves burdened with and struggling under large amounts of credit card debt, they begin searching for debt solutions that can protect their interests and provide some relief from the harassment of creditors. Many people look into the possibility of a debt settlement program, which is a debt relief option generally provided by for-profit companies that involves negotiating a resolution to the debt with the creditors. By "resolving" their debt, debtors will generally make a lump sum payment that will satisfy the creditor but that is ultimately less than the amount originally owed.