The Consumer Financial Protection Bureau has recently released a copy of their new simpler proposed credit card agreements. One point that caught my eye was the use of the term “Workout Arrangement” in conjunction with defaulted debt.
The use of this term, rather than specifying credit counseling or some other debt relief channel is very interesting. It mirrors the language in the Truth in Lending Act (TILA) which actually says “Changes that do not require advance notice include: Rate increases due to the completion of, or failure of a consumer to comply with, the terms of a workout or temporary hardship arrangement, if those terms are disclosed prior to commencement of the arrangement.”
TILA also says, “There are some general exceptions to the prohibition against applying increased rates to existing balances: The consumer successfully completes or fails to comply with the terms of a workout arrangement.” – Source
Now in itself, the use of the TILA language isn’t remarkable, but the use of a more universal term that encompasses a wide range of debt relief solutions may be an indication that the CFPB is not giving a free pass to any one solution.
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