Source Of Excellent Debt And Credit Information: Federal Trade Commission

If you haven’t checked it yet, Federal Trade Commission (FTC) website provides vast amounts of valuable information on debt and credit management. There is information on “what to do” when you are facing unmanageable debt and more importantly, there is information on “what not to do” when you despair over mounting debt. I am not sure many people know about FTC’s resources on these topics (I haven’t seen a lot of references to FTC articles on personal finance blogs…either that or people blog about information from FTC website and never refer back to the source, whatever). I spent the better part of today afternoon reading some of the information on the FTC website and I was impressed.

Here are some of the articles from the website, with my comments, and with some excerpts that you may find useful at some point of time.

1. Knee Deep in Debt: This article provides information about options such as credit counseling, debt management plans (DMP), bankruptcy, and debt negotiation programs for people who are already deep in dept. The key highlight of this article is that it first talk about what you can do yourself as “self-help” before you turn to any of these other options to help debt manage your debt. A subtle thing to note here is that the article makes a distinction between “debt management program” and “debt negotiation program” . An excerpt from the article reads as follows:
   

   Some businesses that offer to help you with your debt problems may charge high fees and fail to follow through on the services they sell. Others may misrepresent the terms of a debt consolidation loan, failing to explain certain costs or mention that you’re signing over your home as collateral. Businesses advertising voluntary debt reorganization plans may not explain that the plan is a bankruptcy filing, tell you everything that’s involved, or help you through what can be a long and complex process.

2. For People on Debt Management Plans: A Must-Do List: This article provides information on how to deal with debt management plans (DMP) and organizations that offer DMPs. It lists some important questions to ask your credit counselor before you sign up for a DMP.
   

   You need to be aware that if payments to your DMP and creditors are not made on time, you could lose the progress you’ve made on paying down your debt, or the benefits of being in a DMP, including lower interest rates and fee waivers. Although creditors may have forgiven late payments that you made before you began the DMP, the creditors may be unwilling or unable to do so if payments are late after you have enrolled in a DMP. If you fall behind on your payments, you may not be able to have your accounts “re-aged” again (reported as current), even if you start a new DMP with a new counselor. That means your credit report will have “late” marks and you will rack up late fees, which, in turn, will lead to more debt that could take longer to pay off.

3. Advertisements Promising Debt Relief May Be Offering Bankruptcy: This article warns about entities that offer “quick” solutions to debt. Watch out for advertisements that display something like this:
   

   
   All they may be doing is to lead you towards filing for bankruptcy instead on debt relief by better debt management. It’s not that bankruptcy is not a “debt relief”, it is indeed a debt relief, but it is last resort after you have tried everything else and nothing has worked.

   Here is an excerpt from the article:

   While the ads pitch the promise of debt relief, they rarely say relief may be spelled b-a-n-k-r-u-p-t-c-y. And although bankruptcy is one option to deal with financial problems, it’s generally considered the option of last resort. The reason: its long-term negative impact on your creditworthiness. Bankruptcy information (both the date of your filing and the later date of discharge) stays on your credit report for 10 years, and can hinder your ability to get credit, a job, insurance, or even a place to live.

There are other interesting articles that I wish to highlight, but that will just take forever. So do yourself a favor, go ahead and visit the FTC website (this information is the “for consumers” part of the FTC website). If you want to google it, search for “FTC on credit” or “FTC’s website on credit” and explore the information on your own.

Here is a link that will take you directly to the information on debt on the website. So there…more tools in your box to beat that debt. Go for it….go for it smartly.