Posts Tagged ‘Fair Debt Collection Practices Act’

US Laws Regarding Credit Card Debt Collection

The US laws have several legal provisions to protect the rights of the consumers when it comes to credit card . Where The Federal Trade Commission (FTC) passed the Credit Card Act (CCA) in 2009, The Fair Debt Collection Practices Act (FDCPA) has been there since the year 1977. The CCA regulates the charges and fees that might be associated with credit card balances. The FDCPA, on the other hand, has been designed specifically to regulate the activities of debt collection agencies. There is also a statute of limitations that restricts the time frame during which a debtor may be sued for the payments.

Statute Of Limitations

The statute of limitations varies depending upon an array of factors, one of which is the type of debt and the state the card issuer is based in. For credit card debt, it is 5 years in most states. It means if you start making defaults now, your creditors will have a maximum of five years to recover the debt. Once this 5-year period is over, you cannot be made liable for that debt. Your creditors, or for that matter, debt collectors will lose the right to sue you for the payments. Every state has different laws regarding the statute of limitations applicable for credit card debt collection. It is important to note that if the credit card holder and issuer are from different states, the laws from the state the issuer is based in will be applicable. It means if you are in Wisconsin but the company that issued the card to you is based in Florida, the Florida statute of limitations will be applicable in your case.

The Credit Card Act 2009

With the growing demand for credit cards, many unscrupulous companies have hit the market that trap consumers through seemingly lucrative offers, but those offers turn out to be nightmare in future because of the “catches” involved win the same. The Credit Card Act was passed in 2009 to regulate the activities of these companies regarding cardholder balances and the charges on it. In most states, now the maximum amount of money that can be charged as late fee should not exceed $25. Likewise, if you exceed your credit limit, you will be charged only for the excess amount that you used. All these laws play an important role when it comes to dealing with credit card debt collection, especially when disputes are filed. Most credit card agreements usually include a clause that gives the issuer the right to change the terms of agreement depending upon market conditions. The changes may include a significant hike in interest rates. But, as per the new laws that are applicable since 2009, no changes to the agreement can be made without sending a 45-day notice to the consumers.

Last, but not the least, it is also important for you to keep in mind that the provisions regarding as explained in the Credit Card Act of 2009 are not applicable for corporate or businesses cards.

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