Debt Blog

I’ve had a couple of clients ask me about how this new credit card legislation is going to affect them.

I gave them information we’ve put together to help educate clients and consumers about how new consumer protections will impact them and their use of credit. I thought I’d share that information here.

The “Credit Card Accountability Responsibility and Disclosure Act of 2009,” called the Credit CARD Act or the Credit Cardholders’ Bill of Rights for short, is a federal law passed by Congress and signed by President Obama in May 2009. This bill goes into effect 2/22.

It’s long, detailed and difficult to summarize, but the Act is comprehensive credit card reform legislation that is introduced as aiming "...to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes."

For instance, the government has increased consumer protections, enhanced consumer disclosures and worked to protect youth from being taken advantage of when obtaining their first credit card.

Our educators have boiled down the basics about how the Act can help you save money.

Today I had a client who sent me a e-mail because she had JUST made her last payment and successfully completed her debt management program. Boy is she relieved! Her e-mail touched me because she took the time to tell me that she “couldn’t have asked for a better counselor”. It made me feel great, especially considering that I had never had the opportunity to meet my client face-to-face. She lives several hundred miles away, but we kept in regular contact over the phone and on e-mail. I really feel as though we accomplished a goal together – she was able to pay off thousands of dollars of debt, and I helped a client to be debt-free before the holidays. It was a great day!

I'm a certified credit counselor and education presenter at ClearPoint Credit Counseling Solutions. Since the economy has taken a dive, I have often been called upon to give our "Surviving Financial Setbacks" workshop when businesses layoff workers.

I was invited to a major non-profit arts organization where I gave two versions of the workshop for their employees-one in English and one in Spanish. The administration had just laid off about 100 workers from top management to gardeners and janitors. During the class, I started by covering how to prioritize what is most important to pay. When salaries are cut, it's hard to cover all of the bills and people must make tough decisions.

I also talked about how to determine their resources. Do they have savings, access to food stamps, unemployment, or severance pay? Even with a low income, using a household budget is important and calculating any income or potential assets to draw from is a large part of that equation.

If people lose their jobs and know they won't be able to make an upcoming credit card payment, I encourage them to call their creditors. Some will negotiate. I've heard of an auto lender, for instance, giving a client a break to stop making car payments (without accumulating any interest) for four months. The creditor conceded to giving him time to get another job and get back on his feet financially. Believe it or not, lenders really don't want the cars or houses back--they usually prefer to work out alternative arrangements.

I teach my students, but they teach me too. I learn a lot from them, especially about creative ways to handle debt and credit cards. We come by a lot of these lessons the hard way and I encourage you to share your techniques for getting out of debt or getting a grip on a tough credit situation by posting to our message boards. Your support will help others in the same boat and we hope they'll offer you a few helpful ideas too. Good luck on your debt repayment journey!

I’m a full-time educator for ClearPoint. I go out into the community and present workshops on various personal finance topics like household budgeting, credit, repaying debt and surviving layoffs.

Earlier this week I visited a major university to give a presentation on credit debt and credit reports. Over 100 people showed up. The auditorium was packed with faculty, students and staff—it really doesn’t matter their level of education, credit is sort of a mystery to a lot of people.

I spoke for a hour and afterwards I had a line of over a dozen people waiting to ask questions. Some people are shy and prefer ask me their questions one-on-one rather than raise their hand in a large group.

The first person to approach me as a guy with a PhD (he had on a name tag) and he started our conversation with, “You’re not going to believe this but I have credit problems.”

I can remember several of the questions I was asked that day—

• How many credit cards should I have?
• If I have too many cards, which one should I close first? (After learning in the workshop that it’s not usually a good idea to close credit card accounts you’ve had for a long time, a woman came up and confessed to me that a few months ago she closed a credit card she had had with Sears for 45 years!)
• What will happen if I transfer my balance from one credit card to another? Like from my Visa to my MasterCard?
• What do you think about businesses that, for a fee, offer to track and protect your credit activity?
• I just found out I’m a victim of identity theft--someone used my credit to buy a car, then it was repossessed and now I have a repo on my credit report. What can I do?

These are the types of questions I get whenever I give a personal finance workshop. I answer as many as I can, provide community references for people and, when it’s appropriate, advise them, make an appointment for a credit counseling session. Our credit counselors get these types of questions all the time and, that’s why we’re here.

I had a client who came to me for budgeting help. She wanted to figure out how to she could pay for graduate school. Although we couldn’t figure out a way for her to swing it financially within her current circumstances, I asked her if she had any friends or family she could stay with while pursuing her master’s degree. It simply had never occurred to her.

She called me several months ago and told me she decided to move to Las Vegas to live with family for free while going back to school!

I love it when we can make a difference, even if it is in a seemingly small way.

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