2005 Bankruptcy Reform Act has passed: Credit Card Holders Struggling with Options as Minimum Payments set to Double

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DTS Financial explains bankruptcy alternatives that consumers should be aware of in the wake of the new bankruptcy law. Consumers will soon struggle with the increase of the minimum payment due to their creditors.

Credit card debt is crippling the nation’s economy. With the new bankruptcy law having been passed and the minimum credit card payment expected to double, consumers now have very few options when dealing with their mounting debt, according to Alex Viecco, Vice President and co-founder of DTS Financial Group, Inc.

During the latter part of the fourth quarter, most credit card lenders are expected to act in accordance with the standards set down by the Office of the Comptroller of the Currency (OCC). Most lenders are expected to double the minimum payment from 2 percent of the balance to 4 percent of the balance. The new standards require credit lenders to apply more of payment sent in towards the principal. The good news surrounding this is that fewer consumers will fall behind on their debt payments in the future; the bad news is that in the interim, consumers that cannot pay any more will be forced to file for bankruptcy.

“We want the public to know that there are viable alternatives other than filing for bankruptcy,” states Viecco. Listed below are the five options:

1. Ignore the problem and hope things get better. This is obviously the least effective and can only compound the problem.

2. Debt Consolidation loans. Not everyone owns a home in order to tap into the equity. Also, most of the lenders are going to charge high interest rates due to the consumer’s current financial state.

3. Credit Counseling. These firms negotiate with the credit lenders on the interest only. This industry is backed by the credit card companies.

4. Bankruptcy. This was an alternative that many chose but with the passing of the Bankruptcy Reform Act, it is no longer a possibility for many consumers.

5. Debt Settlement. This is the quickest route to eliminating consumer debt. This option usually results in settlements that significantly lower the original balance and there is no bankruptcy judgment on consumer’s records after completion.

About DTS Financial

DTS Financial Group, Inc. (http://www.DTSfinancial.com) provides consumers a solution to credit card debt through their Debt Settlement Program. Based in Moorpark, Calif., DTS Financial is a member of the BBB, has more than 2000 clients nationwide, and has settled more than $20 million worth of consumer debt.


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Keith Baldwin