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Credit Card Debt Relief: Scams To Watch Out For
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Credit Card Debt Relief: Scams to Watch Out For

There are many factors that can aggravate one's expenditures, and quite possibly, could lead to card companies pressing charges for unpaid credit card debts. The bad news is, many card companies are taking advantage on the rising numbers of people dealing with debts, tricking even those who are seeking credit card debt relief services. Generally, credit card scams are one of the same, they will lure people by promising to make their debts disappear but will require payment upfront.

A few years ago, the number one debt relief scam was lump sum debt settlement where fly-by-night agencies charge ridiculous amount of money in fees before their customers could even pay their credit card companies. This defeats the purpose of improving one's credit management. The good news is, new federal laws made it illegal for debt relief program agencies to ask for upfront payments in 2010. In this post, we will discuss what types of credit card debt relief program scams you have to watch out for:

Discharge of Debt Bond

Discharge of debt bond is considered by the Federal Reserve Bank and the Office of the Controller of the Currency as a fraudulent program because it may lead debtors to criminal liability. As a general rule, one should read the contract thoroughly before signing anything or better yet, get an attorney to check the agreement first.

Arbitration Clause

Most credit card contract are still featuring arbitration clauses in them. The arbitration clause states that the credit card holder as well as the card company agrees that disputes will be settled with arbitration as opposed to court action. In layman's terms, you are bound to pay hundreds of dollars for getting an arbitration award from an arbitration firm that will claim you do not owe any debt on your account. By signing a contract with arbitration clause risks having a weak defense for potential lawsuits.

Agencies That Buy Card Accounts and Debts

Many card companies will sell charged off accounts to a third party agency. Because credit card debts are considered as unsecured loan, card companies will have no other choice but to charge off certain accounts and sell them off to other collection agencies for penny on the dollar.

Novation

This refers to changing the old credit card contract for a new one. By using the card under the new terms and agreement, the card holder agrees to the new agreement. This can be problematic because this will make it difficult for the CC holder to establish a strong legal defense in case the card company presses charges for unpaid credit card debts.


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