Today, the Federal Trade Commission came down hard on for-profit debt relief firms. The FTC’s new amendments to the Telemarketing Sales Rule will prohibit debt relief companies from collecting advance fees, among other things. Here is some basic information about the new Rule.
Who: The Federal Trade Commission, which enforces the Telemarketing Sales Rule, has developed the new rules.
The rule applies to all for-profit debt relief agencies that sell debt relief services over the telephone, including those that discuss settlement over the phone with prospective clients. In other words, they don’t have to be cold-calling consumers to be covered by the rule.
When: These final amendments are effective on September 27, 2010, except for the upfront fee ban, which is effective on October 27, 2010.
What: The Rule will:
(1) prohibit debt relief service providers from collecting a fee for services until a debt has been settled, altered, or reduced;
(2) require certain disclosures in calls marketing debt relief services; and
(3) prohibit specific misrepresentations about material aspects of the services.
Debt Aid Processing is a business process outsourcing company. An advantage of BPO is the way in which it helps to increase a company’s flexibility. However, several sources which have different ways in which they perceive organizational flexibility. Therefore business process outsourcing enhances the flexibility of an organization in different ways.
Most services provided by BPO vendors are offered on a fee-for-service basis. This can help a company becoming more flexible by transforming fixed into variable costs. A variable cost structure helps a company responding to changes in required capacity and does not require a company to invest in assets, thereby making the company more flexible. Outsourcing may provide a firm with increased flexibility in its resource management and may reduce response times to major environmental changes.
Another way in which BPO contributes to a company’s flexibility is that a company is able to focus on its core competency, without being burdened by the demands of bureaucratic restraints. Key employees are herewith released from performing non-core or administrative processes and can invest more time and energy in building the firm’s core businesses. The key lies in knowing which of the main value drivers to focus on – customer intamacy, product leadership, or operational excellence. Focusing more on one of these drivers may help a company create a competitive edge.
A third way in which BPO increases organizational flexibility is by increasing the speed of business processes. Using techniques such as linear programming can reduce cycle time and inventory levels, which can increase efficiency and cut costs. Supply chain management with the effective use of supply chain partners and business process outsourcing increases the speed of several business processes, such as the throughput in the case of a manufacturing company.
Finally, flexibility is seen as a stage in the organizational life cycle. BPO helped to transform Nortel from a bureaucratic organization into a very agile competitor. A company can maintain growth goals while avoiding standard business bottlenecks. BPO therefore allows firms to retain their entrepreneurial speed and agility, which they would otherwise sacrifice in order to become efficient as they expanded. It avoids a premature internal transition from its informal entrepreneurial phase to a more bureaucratic mode of operation.
A company may be able to grow at a faster pace as it will be less constrained by large capital expenditures for people or equipment that may take years to amortize, may become outdated or turn out to be a poor match for the company over time.
The average consumer carries around $20,000 worth of credit card debt and pays close $400 a month on that credit card debt. The average interest rate on credit cards in the United States is 15% APR. So if you take the time to figure out the statistics you will find that over the life of your credit card debt you will end up paying back the credit card company $70,003.50 for the $20,000 you borrowed. It would also take you 175 months or 14.58 years to completely payoff your credit card debt.
If you choose to enter into a Debt Settlement program with $20,000 on average your total amount of debt would be reduced to $11,600 including the debt settlement company’s fees. You would end up saving a total of $50,003.50 in interest and a total of $8,400 in your principal balance. Making your grand total savings of $58,403.50! If you continue paying $400 per month in a debt settlement program you will be completely debt free in 33.14 months. Under 3 years!!
Interest rates
Interest rates vary widely. Some credit card loans are secured by real estate, and can be as low as 6 to 12% in the U.S. (2005). Typical credit cards have interest rates between 7 and 36% in the U.S., depending largely upon the bank’s risk evaluation methods and the borrower’s credit history. Brazil has much higher interest rates, about 50% over that of most developing countries, which average about 200% (Economist, May 2006). A Brazilian bank-issued Visa or Mastercard to a new account holder can have annual interest as high as 240% even though inflation seems under control at around 6% per annum (Economist, May 2006). Banco do Brasil offered its new checking account holders Visa and Mastercard credit accounts for 192% annual interest, with somewhat lower interest rates reserved for people with dependable income and assets (July 2005).[citation needed] These high-interest accounts typically offer very low credit limits (USD$40 to $400). They also often offer a grace period with no interest until the due date, which makes them more popular for use as liquidity accounts, which means that the majority of consumers use them only for convenience to make purchases within the monthly budget, and then (usually) pay them off in full each month.
Calculation of interest rates
Most U.S. credit cards are quoted in terms of nominal APR compounded daily, or sometimes (and especially formerly) monthly, which in either case is not the same as the effective annual rate (EAR). Despite the “annual” in APR, it is not necessarily a direct reference for the interest rate paid on a stable balance over one year. The more direct reference for the one-year rate of interest is EAR. The general conversion factor for APR to EAR is EAR=((1+APR/n)^n)-1, where n represents the number of compounding periods of the APR per EAR period. For a common credit card quoted at 12.99% APR compounded daily, the one year EAR is ((1+.1299/365)^365) -1, or 13.87%; and if it is compounded monthly, the one year EAR is ((1+.1299/12)^12) – 1 or 13.79. On an annual basis, the one-year EAR for compounding monthly is always less than the EAR for compounding daily. However, the relationship of the two in individual billing periods depends on the APR and the number of days in the billing period. For example, given 12 billing periods a year, 365 days, and an APR of 12.99%, if a billing period is 28 days then the rate charged by monthly compounding is greater than that charged by daily compounding [ .1299/12 is greater than ((1+.1299/365)^28)-1]. But for a billing period of 31 days, the order is reversed (.1299/12 is less than ((1+.1299/365)^31)). In general, credit cards available to middle-class cardholders that range in credit limit from $1,000 to $30,000 calculate the finance charge by methods that are exactly equal to compound interest compounded daily, although the interest is not posted to the account until the end of the billing cycle. A high U.S. APR of 29.99% carries an effective annual rate of 34.96% for daily compounding and 34.48% for monthly compounding, given a year with 12 billing periods and 365 days.
Lured by the exotic loans or attractive loan schemes, you may sometimes land yourself in a situation where you will lose the balance between your monthly income and monthly expenditure. It is a financial catchy position where you can find it difficult to make your monthly payments. You may be you are thinking about filing Bankruptcy. But did you know, declaring Bankruptcy may not be the last option available. Did you know there are alternatives to Filing Bankruptcy?
Filing for bankruptcy is a difficult decision to make. While filing Bankruptcy can assist you in alleviating your dues and debts, it can also affect you more adversely than you can think of.
Bankruptcy can have disturbing effects on personal and professional life for longer duration. It affects your credit rating and borrowing capacity in near future. Hence, declaring bankruptcy should be considered as last resort.
There are other alternatives available which can pull you out from such awkward positions. There are numerous reasons for people to avoid bankruptcy.
People filing bankruptcy have to bear the loss of their assets. In most of the cases court used to sell those assets like house, plot or even car to clear off debts.
Whenever you file for bankruptcy, then control goes to the magistrate handling your case and your fate can be decided by him judging the information received by Official Receiver.
Bankruptcy has a very devastating effect on your credit history for at least next 7 years. With such a poor credit score it becomes very difficult to get a loan or mortgage to start a fresh life.
Declaring bankruptcy can ruin your career prospectus. There are certain careers which do not accept you if bankrupt. Even there are few restrictions on being director or owning business.
Being bankrupt hampers your social life to much extent. It is quite embarrassing situation once your bankruptcy gets advertised in newspaper.
It is obvious that credit card debt can hinder your financial success. Eliminating excessive debt sometimes means choosing between seeking credit counseling with a third party or negotiating a settlement directly with the lender.  Both of these alternatives have advantages. It’s important to determine exactly which solution is best for the problem at hand financial planning is complicated, but with a little patience and research it becomes easier to make constructive choices. Of course, each individual must decide what works best in the current economic climate.  Seeking counseling to help reduce or eliminate high interest credit payments can help borrowers resolve debt problems.
Clients pay the credit counseling firms directly, either through consolidation or monthly payments. The agency then takes care of paying the bills. These companies help consumers in several ways. The most important service they provide is skillful negotiation with lenders. Since creditors have widely varying policies, the counselors must be up to date on the most current information. They can then use that information to bargain for a lower interest rate reduced payments, or even consolidation of certain loans. In addition, they can provide advice on budgeting, handling money, and effectively operating in the financial world.
If the situation has progressed, debt settlement becomes a possible option. In this process, the consumer or company representative negotiates to reduce the principal amount of a loan. Although many people do not know about this, it can be done by any borrower. First, the loan must be declared to be in default. This may have happened already if no payments have been made for several months. Once defaulted, a loan becomes a loss to the lender, which means that the lender will often accept a much smaller total amount in order to recover at least some of the money owed. Settling debt will eliminate debt more quickly and efficiently. Â Debt Aid Processing offers the best alternative to bankruptcy available to the consumer.
Getting out from under a financial burden can be the first step to success. Becoming an affiliate of Debt Aid Processing will allow you to offer seasoned advice on the right personal debt management plan. The best option is dependent on personal preference, financial goals and the current economic climate. Taking all these factors into consideration can help resolve debt problems with a minimum of negative consequences.
Want to get rid of your debt but don’t want to file for bankruptcy or risk foreclosure? If so, debt settlement is an option worth considering. You might think you can’t settle your debt on your own, but the truth is you can do it yourself. There’s no law that says you have to hire a company to handle the debt settlement process. In fact, hiring an outside company usually means paying the company a hefty commission based on the total amount of your debt.
The key to successful debt settlement is negotiation and it’s a skill anyone can learn. Just follow these seven simple steps to do it yourself. Remember when you negotiate, you’re not only reducing the amount you pay individual credit card companies each month. You’re also lowering your total debt by 50 to 80 percent.
Once you start negotiating with creditors you’ll find that settlement amounts will vary. Some may offer as low as 30% and others up to 50%. Some will even forgive most of the amount you owe. Try it and in about six months you’ll be off to a fresh start.
Here are seven debt settlement and creditor negotiation steps you can do yourself:
1) First you need to accumulate a sizable amount of unmanageable debt, which you’ve probably already done since you’re thinking about settling.
2) Next you have to determine that debt settlement is your best option.
3) Once you make that determination, stop making your monthly payments.
4) Take the money you would have spent making those payments and put it into a savings account. Or if you can, try to get a loan with a low or zero percent interest rate from family or friends.
Debt Aid Processing at the TASC 2010 Conference, Charting the Course through change
Debt Aid Processing will be at the TASC (The Association of Settlement Companies) 2010 Conference on March 14 to 16, 2010 (Sunday to Tuesday) at The Venetian, Las Vegas.
In this economy, many people find themselves facing difficult financial situations.  Certain circumstances such as unexpected medical bills, credit card bills, and divorces can surely present further challenges. When the burden of debt becomes overwhelming, many believe filing bankruptcy is their only option. Bankruptcy can be broken up into two categories:
Chapter 13 Bankruptcy- In this type, the debtor proposes a plan to repay creditors over a three to five year period during which the debtor can make up overdue payments on any assets and pay into the plan the equivalent value of any assets not covered by exemptions. Exemptions refer to properties that the law allows for the debtor to keep. The debtor will then make regular payments to creditors through a trustee and will not be discharged of the debt until the payments are complete. The debtor is, however, protected from wage garnishments, lawsuits, and other creditor action while making the payments.
Chapter 7 Bankruptcy-This type requires the collection of the debtor’s assets by a trustee who then distributes the cash obtained from those properties to creditors. In order for creditors to receive any money from the assets, they need to file a claim with the bankruptcy court which will deem their claim justified as it sees fit.
When trying to decide whether debt settlement is the right option or not, keep one thing in mind; not all kinds of debt can be settled. For our purpose, there are two general categories of debt that we will look at, unsecured and secured. An unsecured debt is one accumulated without any physical collateral being at stake. This includes:
Debt Aid Processing does not assume or pay any debt, nor does it give legal advice, offer credit repair, or help stop creditor & collector calls. Individual results may vary and are dependent on successful completion of program and ability to save funds.
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