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Debt Consolidation in Iowa
(Note: this is for educational purposes only, and although efforts have been made to keep this up to date and correct, there are no guarantees about the accuracy of anything contained below. It should not be construed as legal advice. For legal advice, please consult with an attorney licensed in Iowa.)
With more residents in Iowa buried under a mountain of credit card debt, many have begun turning to debt consolidation options like consumer credit counseling for help managing their finances. While many have achieved the long sought after goal of debt freedom, others have chosen the wrong solution for their needs, or worse, been the victim of a debt relief scam. The point of this article is to address what is debt consolidation, as well as what laws are in place in Iowa to protect its residents from fraudulent debt companies.
The two types of debt management available to people today are credit counseling and debt settlement. Debt settlement is generally considered a much more aggressive approach to reducing credit card debt of the two. That is, the savings tend to be greater and the time till one is completely debt free is much faster, but at the same time, the risks associated with this route are much greater. In these plans a consumer falls behind on their payments, which can potentially lead to some problems. For one, creditors will report the debt as past due, leading to negative effects on your credit. Secondly, collection activities will continue per usual on the account. That means you’ll experience phone calls and possibly even lawsuits.
Credit counseling is a conservative approach to getting out of debt, which has its own drawbacks and benefits. In credit counseling, a consumer can get budgeting help and financial education to help manage their credit and debt. If appropriate, a debt counselor may suggest a debt management plan. In these programs, one’s interest rates can be reduced and the client is offered the convenience of one monthly payment. These plans may not be affordable depending on your situation, and credit counselors do charge fees even though they are non-profit.
Want a free consultation about debt relief from a professional? Submit a form today!
Iowa Debt Management Regulations
To protect Iowans from the unscrupulous practices of some debt counselors, there was a set of laws put into place limiting the fees charged by debt management companies.
Definition
Iowa law defines debt management as “the planning and management of the financial affairs of a debtor and the receiving therefrom of money or evidences thereof for the purpose of distributing the same to the debtor's creditors in payment or partial payment of the debtor's obligations for a fee.”
Fees
Some of the fee requirements for debt consolidation agencies include:
-not charging a fee unless at least half of the creditors included in the plan agree to offer concessions to the debtor
-not charging a fee in excess of 15% of the amount distributed to the creditors pursuant to the contract
Exemptions
It should be noted that Iowa exempts non-profits so long as the fees associated with their services are completely voluntary.
For more information about the debt management and credit counseling law in Iowa, follow this link: Iowa Debt Statutes
Other Resources
Filing Bankruptcy in Iowa
Bankruptcy Laws in Iowa
Debt Collection in Iowa
With more residents in Iowa buried under a mountain of credit card debt, many have begun turning to debt consolidation options like consumer credit counseling for help managing their finances. While many have achieved the long sought after goal of debt freedom, others have chosen the wrong solution for their needs, or worse, been the victim of a debt relief scam. The point of this article is to address what is debt consolidation, as well as what laws are in place in Iowa to protect its residents from fraudulent debt companies.
The two types of debt management available to people today are credit counseling and debt settlement. Debt settlement is generally considered a much more aggressive approach to reducing credit card debt of the two. That is, the savings tend to be greater and the time till one is completely debt free is much faster, but at the same time, the risks associated with this route are much greater. In these plans a consumer falls behind on their payments, which can potentially lead to some problems. For one, creditors will report the debt as past due, leading to negative effects on your credit. Secondly, collection activities will continue per usual on the account. That means you’ll experience phone calls and possibly even lawsuits.
Credit counseling is a conservative approach to getting out of debt, which has its own drawbacks and benefits. In credit counseling, a consumer can get budgeting help and financial education to help manage their credit and debt. If appropriate, a debt counselor may suggest a debt management plan. In these programs, one’s interest rates can be reduced and the client is offered the convenience of one monthly payment. These plans may not be affordable depending on your situation, and credit counselors do charge fees even though they are non-profit.
Want a free consultation about debt relief from a professional? Submit a form today!
Iowa Debt Management Regulations
To protect Iowans from the unscrupulous practices of some debt counselors, there was a set of laws put into place limiting the fees charged by debt management companies.
Definition
Iowa law defines debt management as “the planning and management of the financial affairs of a debtor and the receiving therefrom of money or evidences thereof for the purpose of distributing the same to the debtor's creditors in payment or partial payment of the debtor's obligations for a fee.”
Fees
Some of the fee requirements for debt consolidation agencies include:
-not charging a fee unless at least half of the creditors included in the plan agree to offer concessions to the debtor
-not charging a fee in excess of 15% of the amount distributed to the creditors pursuant to the contract
Exemptions
It should be noted that Iowa exempts non-profits so long as the fees associated with their services are completely voluntary.
For more information about the debt management and credit counseling law in Iowa, follow this link: Iowa Debt Statutes
Other Resources
Filing Bankruptcy in Iowa
Bankruptcy Laws in Iowa
Debt Collection in Iowa