Credit Card Debt Laws – Here is All You Need to Know

As you start rolling out plans to deal with credit card debts, the knowledge of credit card debt laws could be a big help to you. You can plan your way out of debts better if you understand credit card debt laws. Here is what will help you come to grips with credit card debt laws…

1. The window period: A credit card issuer can sue their debtor for outstanding debts only within a particular time-frame. These time periods are set by state’s legislation. If you hold a credit card, be aware of this time frame.

2. When debts go time-barred: If the credit card debts exist even after the window period is over, they are referred to as time-barred debts. Credit card issuers can collect time-barred debts but can’t take a debtor to court for such debts. If a company files litigation over debts that are time-barred, a debtor can have it immediately absolved by letting the judiciary know that the debt in question is time-barred. Do not ignore any legal notices over time-barred debts. It is generally the duty of the debtor to apprise the court of the nature of the credit card debt.

3. Credit card laws pertaining to debt collection: The Fair Debt Collection Practices Act (FDCPA) is enacted by the federal legislation and lists the procedures pertaining to debt collection. This act lays down strict guidelines for debt collectors and credit card issuers. These guidelines need to be followed when contacting debtors for pending debts.

  • No credit card company can make a collection phone call to a debtor before 8 am or later than 9 pm.
  • Consumers (credit card holders) are allowed to do away with any communication with the creditor, and credit card issuers need to honor this request.
  • Credit card issuers can register cases (against debtors) only with the state in which the debtor resides, or with the state under whose jurisdiction the debtor had signed a contract with the creditor.
  • The credit card agreement signed between a consumer and the credit card issuer determines the applicable clauses, should a legal action be initiated for debt collection. So, watch out when you sign the agreements.

4. Credit card laws regarding old debts: You have a credit card debt that is nearing/beyond its window-period deadline and you acknowledge or re-pay a part of the debt; what happens to the debt? The window-period on the debt starts all over again. This practice is commonly referred to as re-aging. Re-aging can happen no matter how small the repayment happened to be. Keep your thinking caps on while dealing with old credit card debts.

5. Credit card laws on rate-hikes: The following minimum conditions need to be met in order to hike interest rates due to late payment:

  • The delay in payment is beyond 60 days.
  • The cardholder should be notified in writing at least 45 days prior to any such hike.

6. Settle credit card debts legally: Credit card debt settlement is a legally recognized process wherein a credit card issuer settles for an amount lower than what is actually due on the debtor. The settlement goes on record legally and January have an adverse affect on the debtor’s credit report.

7. Cannot force a debtor: Credit card debts are unsecured debts (unless specifically mentioned otherwise) and a credit card issuer cannot force a debtor to do away with any form of asset/property/vehicle etc to recover debts. As stated earlier, the credit card companies can however file lawsuits against debtors.

Being aware of credit card debt laws is not only a fundamental right of every consumer; it also helps in effectively dealing with debts and legal issues. Ignorance can hurt you hard. So, don’t miss the trick and get a hang of the laws so that you are safe even if things go a little haywire.


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