July 03, 2010

Best financial advice and debt help

Ten largest U.S. based credit card companies have agreed to provide a debt management plan, known as Call to Action, to consumers struggling to repay their debts. When debtors are unable to pay off debt, they often hesitate to seek best financial advice or help form professional debt relief companies. This hesitation leads to accumulation of more debts as a result of which there has been a significant rise in credit card defaults and charge-offs. The new plan will enable individuals in distress to pay off their debts by allowing them a lower repayment rate.

What is Call to Action?
The National Foundation for Credit Counseling (NFCC) had issued a “Call to Action” in September 2008, asking creditors to provide people in extreme financial hardship with reasonable repayment terms. Call to Action encourages individuals seeking best financial advice and debt help to enroll in a debt management plan.

How can debtors benefit under the Call to Action system?
Credit card issuers have agreed to create a second tier of debt management plans for consumers facing financial hardship. The NFCC has asked the credit card companies to allow participants of Call to Action debt management plans to make monthly payments of 1.75 % of their outstanding balances. This system will help debtors in the following ways:

Counseling session: A certified counselor will provide consumers with free best financial advice after considering factors like his sources of income, living expenses, and monthly debt liabilities.

Lower interest rate: When consumers enroll in this debt management plan, creditors will reduce the interest on the debts, waive off late charges and make favorable adjustments to the finance charges.

This modified plan will not only provide free best financial advice and reduced rate of interest but also allow debtors to save each month $25 to $200 more than a regular debt management plan.

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