Obama Credit Card Debt Relief Program – How to Use It

Edited by Hannah Locklear

There has been a lot of fictitious information on the internet in the recent past about the Obama credit card debt relief program. In fact, there's no such thing as the 'Obama Credit Card Debt Relief Program' supposedly sponsored by the former US president. Additionally, there's no government debt relief program that will underwrite your debts without any consequences.

In reality, what people call the Obama Credit Card Debt Relief Program is the Credit Card Accountability Responsibility and Disclosure Act of 2009, popularly known as the Obama Credit Card Act.

The Obama Credit Card Act of 2009 was introduced to increase transparency in the operations of credit debt relief companies. In addition, it was meant to protect consumers who signed up for debt relief programs. For this reason, the Obama administration passed federal laws that made credit card debt relief much more accessible than before.

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Changes that came with the Obama Credit Card Act of 2009

Amendments to the credit card debt law meant that credit debt relief companies could no longer charge customers upfront fees; they could only charge a fee once they've delivered on their promise of reducing the debtor's credit card bills.

Moreover, the bill and fee charged by the debt relief company had to be proportionate to the amount of debt reduced.

The bill also required debtors to set up a special bank account they had total control over when signing up for a debt relief company program.

What's the impact of the Obama Credit Card Act of 2009 on debtors?

Debtors are now free to sign up for a credit debt settlement program without fear of being abused or exploited. But this doesn't necessarily mean that every debtor should sign up for a debt relief program.

Credit card debt settlement programs may work for one debtor and fail for another. For instance, it's always advisable for debtors who plan on filing for bankruptcy to sign up for a debt relief program. But if you don't plan to file for bankruptcy, you may consider other credit card relief options other than a credit card settlement plan.

Another example of a debtor who would benefit from a credit debt settlement plan is someone who prefers debt settlement as a possible credit debt relief option. However, before signing up for a debt relief program, it's essential to research and learn more about credit card debt settlement.

Some of the vital questions to ask include:

• What does credit card debt settlement entail?
• What factors should you consider when looking for a credit card debt relief company?
• How can you make the most of the credit card debt settlement process?

Note that the debt settlement program isn't for everyone; only opt for it if you need it or don't want to file for bankruptcy.

Some of the consequences of enrolling in a debt settlement program include:

• It will hurt your credit score.
• Creditors won't stop with their collection calls and actions.
• Halting payments to your creditors may mean additional fees and higher interest charges.

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How does debt relief work?

After enrolling in a debt settlement program, you stop making payments to your credit card company but instead make payments to a designated account under your control. However, the credit card company won't stop attempting to recover the debt.

When that happens, it'll be the responsibility of the debt settlement company to handle negotiations with your creditors. If the debt settlement company and creditor reach an agreement, the funds you saved into the designated account will then be used to pay off the creditor and debt relief company.

Most of the time, the amount paid is usually less than the original amount owed to the credit card company.

Are all debt settlement companies trustworthy?

Millions of Americans are struggling with credit card debt. Unfortunately, for this reason, some companies have created fake marketing schemes around the Obama Credit Card Act.

For instance, the name 'relief program' doesn't exist - it's just a marketing tactic by such companies to prey on desperate individuals struggling with the burden of debt.

They make it seem like the 'relief program' is a government-sponsored program to erase your debts, which is false. Instead, their goal is to convince you to enroll in their debt relief program whether you need it or not.

However, just because fraudulent debt settlement companies exist doesn't mean that enrolling in a debt settlement program is not a good idea. It only means that you should do your due diligence when selecting a debt relief company.

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How to find a legitimate debt settlement company

Legitimate debt settlement companies exist and can help you get out of debt by negotiating a settlement plan with your creditor. The best way to find a legit debt settlement company is to find one accredited by the American Fair Credit Council (AFCC).

Accredited members of the AFCC are independently audited and follow strict regulations. Moreover, all accredited AFCC members follow the Obama Credit Card Act of 2009, which prohibits collecting upfront fees.

Here are some Fair Trade Commission recommendations to follow when selecting a debt settlement company:

• Conduct thorough research before settling on a debt settlement company.
• Don't opt for companies that take upfront fees. A legitimate company won't collect fees until they first reach an agreement with the creditor on how you should settle your debt.
• If you create a specially designated account, it should be in your name, and a Federal Deposit Insurance Corporation (FDIC) insured account.
• The debt settlement company should provide you with the full disclosure of their fees and the exact services offered. They must also inform you of the drawbacks of enrolling in their debt relief program.

Following the introduction of the Obama Credit Card debt relief program, you can freely sign up for a credit debt settlement scheme of your choice without fearing that the company will drain your finances after that. However, as noted earlier, signing up for a debt relief program doesn't necessarily mean that the debt collection agency will stop attempting to recover what you owe.

For this reason, if you ever get sued for a debt, you should never ignore the lawsuit. Instead, you can use SoloSuit to file an attorney-approved answer in three easy steps. Click here for more information.

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit: A Student Solution To Give Utah Debtors A Fighting Chance

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