fairdebtcollectionpractices

Debt Consolidation Program

Debt consolidation programs offer people who are burdened under many different loans taken from private money lenders or pawnbrokers but do not have sufficient income to pay off the debt to take another loan. This loan can then be used to pay the several older loans. The advantage of a debt consolidation loan is that it is a secured loan taken against collateral, usually a house, share certificates or bonds issued by national treasuries.

Secured loans taken under a debt consolidation programs have many advantages over the unsecured loans taken from money lenders. Being unsecured loans taken from non-commercial sources, the rate of interest charged is very high. The rate of interest for a secured loan is relatively less as compared to a unsecured loan whether taken from business establishments or private moneylenders. This is because the person availing the loan mortgages his assets as collateral. This gives the moneylender to legally foreclose (auction or sell the asset mortgaged) to recover his money if the debtor defaults on his payments.

Debt consolidation programs have helped many people burdened with debt to streamline their finances. These programs allow people to pay EMIs of their all loans through one single payment instead of numerous small payments to different establishments from where they have taken loans.

People with credit cards or shopaholics have the highest chances of running up huge debts. Even if the monthly installments are paid without fail the chances of becoming debt free are very small unless the amount paid is much higher than the minimum monthly installment. This is because the interest rate for credit card bills is calculated on compound basis. This means interest amount is calculated on the total loan taken plus the amount of interest for the loan. The minimum installment is slightly higher than the rate of interest. Thus if a debtor pays only the minimum installments the amount repaid decreases only a little or sometimes not at all because the rest is adjusted against processing fees and other charges. So, even though a person has been paying his EMIs regularly, he shall never become debt free unless the rate of interest reduces but person keeps the installment amount same or he pays the entire debt amount at once.

Many renowned financial companies run debt consolidation programs. These companies negotiate with `the creditors on behalf of customers for a lower rate of interest and lower minimum installments. If the creditor agrees, a contract is framed with the terms and conditions negotiated.

An ACH payment is done to agency running the debt consolidation program which then forwards the amounts negotiated with the respective creditors.  Some other advantages of the loan taken for debt consolidation are:

It is not factored into customer’s credit score. Customer does not have to make many different payments. A fixed monthly amount is deducted from the customer’s checking or savings account through ACH. This allows the customer to adjust his new monthly budget after taking into account the deduction for the repayment of debt.

(Source: Debt Consolidation Program)

About The Fair Debt Collection Practices Act

The fair debt collection practices act is the basic law that helps people in debts deal with financial problems in an amicable way. One can invoke sections of the law in case there is a dispute between a borrower and the lender or any agency involved with thus it is purely designed to ensure there is understanding when dealing with debts. Since the formulation of this piece of legislation, cases of conning in the financial world have minimized which is a positive sign.

 

Under the law, there is an assistance officer in charge of debt collection whose role is to help any person with debt issues get past the problem without experiencing any hurdles. Once your case has reached the officer, he or she will have to look out for your accurate information and details concerning the debt in question before making an informed decision on the direction the case will take. The officer is empowered by the fair debt collection practices act to determine any case single-handedly therefore the warring parties are bound to go by the ruling the officer makes.

 

There is also a debt collector recognized by this law and there are many things one holding the position is allowed to do as well as prohibited from engaging in. For example, one is allowed to make formal contact with the debtor in whichever means of communication he or she deems appropriate to put the point across concerning a debt. The debt collector also is allowed to access information concerning a debt, its creditor and debtor which places him or her in a good position of determining any debt related case in a professional way.

 

To the contrary, this fair debt collection practices act does not allow the debt collector to get into contact with the debtor or creditor during odd hours as that may amount to interference with the determination of a debt case. It is furthermore against this law for the debt collector to disclose personal information of any borrower concerning a debt as that is considered to be personal and confidential. The same applies to making public the names of persons who have not cleared their debts on time or have refused to do so since that is deemed to be an agreement between a borrower and the lender.

 

In case the debt collector contravenes any clause included in this law, there are stringent measures laid down for retribution which are applied without any discrimination whatsoever. The debtor is allowed to sue the agency which the debt collector works for and this can include a personal case filed in a federal court. The agency can alternatively take a decisive action on any of its debt collector who breaches this law if it finds it’s appropriate to take such an action which will be well within the law.

 

Generally, this law favors both the creditor and debtor thus it’s all inclusive to cover all their issues and concerns. It is, however, a crime to use this law in playing dirty tricks with other people which can attract heavy consequences to any person involved.

 

(Source: )