Archive for October 2011
Each state has a statute of limitations on old credit card debts. The statute of limitations refers to the period after which, creditors cannot sue you to collect the debt. The length of time is calculated from your last payment date or last activity date (this is when you last used the card).
Refer to the old debts statute of limitations chart, which details the statute of limitations by Oral Contracts, Promissory Notes, Written Contracts and Open-Ended Accounts. Note that the transient nature of state legislature requires you to verify the statute of limitations period with your State Attorney’s office. For more information go to http://www.naag.org.
In the past 10 years, a growing trend has ensued, where aggressive debt collectors buy old debt accounts and actively pursue consumers to collect the debt, even though the statute of limitations has past. They purchase these accounts for pennies and hope that you will pay up. Even if, you pay $1 on the account – they make a good profit.
This is a violation of the Fair Debt Collections Practices Act. Some creditors even lie and say that the statute of limitations starts from the day that they purchased the debt account. These companies are so bold that some of them will threaten to sue you and in fact proceed with the court case – don’t give in. Others will harass you day and night, use profanity or promise to erase negative marks off your credit repot, if you send in a minimal payment.
If you find yourself in this situation here are a few tips on what to do:
Do not send in a payment – if the statute of limitations is past in your state. Doing so, will make your delinquency look recent. It will also give the debt collectors the idea that you are an easy target and they may attack you on other fronts.
Keep an eye on your credit report to make sure that they are not reporting negative information about you. Your old debt account should not be reflected on your credit report since the statute of limitations is past. If you find that they are reporting the information, take corrective action immediately and fix any errors.
If possible, ignore all contact with the debt collection agency. Do not accept their phone calls. If they send you notices in the mail, you will want to keep these as proof of their harassment.
The Fair Debt Collection Practices Act indicates that there are certain things that creditors cannot do in their attempt to collect debt. Go to http://www.poorcreditgenie.com/answers.html for a list in plain speak. For a complete list, go to [http://www.ftc.gov/bcp/conline/pubs/credit/fdc.htm].
Verify the statute of limitations information with your State Attorney’s office and solicit further advice on how to navigate your situation.
There were more bankruptcies in 2005 compared with the year before. Non-performing loans for consumer credit like housing, cars and credit cards, have risen in the past five years. With rising consumer credit issues, should regulators ask banks to rein in consumer credit?
Lending and borrowing activities are as old as society. On one hand, if access to credit is a basic right, can you deny it? Because setting a threshold means denying credit to someone. On the contrary, when there is an easy credit, more people will land themselves in trouble.
If loose credit is being blamed for debt problems, setting higher thresholds for access, especially to credit cards, has been suggested. The number of bankruptcies due to credit cards is still relatively small, but of concern is the proportion belonging to youths. They are most vulnerable, as they tend to spend and worry about the pain later. Thus, a higher salary limit should be imposed.
Moreover, even a single person who is earning a reasonable basic salary a month will find it hard to make ends meet because the cost of living in urban areas has gone up significantly. How can he meet the repayment on a credit card? With all this emphasis on credit, savings have been left out of the equation.
However, higher income requirements alone won’t solve the problem of poor credit management. People who borrow irresponsibly should be denied credit, but what is the best way to determine responsible or irresponsible borrowing? It has nothing to do with income.
There is a suggestion of increasing in the minimum credit card payments. If you borrow $1,000 and pay 5%, it will take you 20 months to pay it off. If you pay 15% every month, it can be paid off in six months. There is also a suggestion of setting up a debt-counseling agency by the government to provide consumers with financial counseling and to negotiate with lenders on behalf of debtors.
Raising the bar so that only worthy individuals get credit is one thing while wise management of credit once it is obtained is another matter.
Competition among banks serves to improve loan product features for consumers, resulting in benefits like annual fee waivers for credit cards, lower interest rates for balance transfers and 0% interest installment schemes. However, does competitiveness encourage bad debt?
Although there are consumer education programs and credit card statements carry an educational message about how much interest can accumulate if you pay less than the full amount, enclosed with that statement are leaflets giving incentives for consumers to carry balances on their cards. Signals are often inconsistent for the consumer.
There should be some form of ethical marketing regulations but who is going to enforce them? Advertising control always poses challenges because of the argument for freedom of speech and the right to know. However, the regulator can play a more proactive role. There are now new advertising techniques to appeal to the individual’s emotions. There should be some form of restraint in advertising, whether achieved by the regulator, self-regulation or co-regulation in some form.
We can’t blame the banks for marketing their products. So, the ball is back in the consumer’s court; they have to educate themselves. It’s the banks’ right to market and to make money, but it’s the consumers’ responsibility to educate themselves.
Credit cards are the recent innovation in the system of payment. The user can buy goods and services using this card. Instead of carrying money around it is easy to carry a card as well as when there is not enough money in the account things can be bought. Interest is on the amount borrowed, after a grace period of some days. To obtain a credit card an account has to be opened and approved by the bank or the credit provider. There are various financial corporations and banks which offer this facility. The card holder can use it to buy at places where the payments through cards are accepted. The card holder has to be prompt in the repayments to the card issuer.
Electronic verification is done to verify the validity of the card and also to find whether the card customer has sufficient funds or credit limit to make the purchase at the time of purchase. Customers find it convenient to use a credit card when compared to the use of debit card or any other means of payment, since a small credit can be quickly obtained by the card holder.
The interest is collected only if the payment exceeds the grace period. The interest will be charged for the total amount until the total amount is paid. All the details of the repayment such as interest rates are explained to the cardholder before he acquires the card.
Careful and calculative use of credit card would definitely be a boon to the user. The user must know for what he needs to use the card, and should not make purchases which can be very well avoided. The card must be used only when in real need and not just because it is easy to make purchases with it.