Credit Card Changes Wreaking Havoc
An early victory for the Obama administration in 2009 was the passage of the Credit Card Accountability, Responsibility and Disclosure Act (CARD) in May. The Act seeks to improve consumer protection in the credit market by limiting what credit card companies can do in the event of consumer default; limiting interest rate hikes; changing rules on late fees; and requiring companies to offer consumers more information about their long-term balances.
Credit card companies, however, are not sitting back and waiting for the new consumer-centered laws to take effect. They are taking active steps to do what they can to thwart the new laws slated to go into effect in early 2010.
Changing Interest Rates
Credit card companies have begun raising interest rates for those who are carrying the largest balances on their cards. Creditors argue that higher interest rates are necessary for riskier debtors who may face unemployment in a down market. Such rake hikes, however, actually seem to cause some debtors to miss payments. Another tactic that credit card companies have used is increasing the minimum payments to reflect a higher percentage of the balance due.
Due in part to the credit card companies' actions, personal bankruptcies have risen almost 10 percent just this past October. A significant portion of the responsibility lies with credit card companies' interest rates, some of which reach 30 percent. Many people hope to get into a debt-relief plan with a credit counselor or cut a deal with a creditor before having to file bankruptcy; for some, however, bankruptcy has become inevitable. Successful bargaining with a credit card company is becoming less likely as creditors deal with new regulations. They have become increasingly less likely to take on risks and less receptive to pleas over the phone.
Small Businesses Are Also Affected
How will small businesses be affected by such policies on credit? Ironically, the credit card rate hikes that are coming swiftly before the dawn of the new year will disproportionately affect those with excellent credit scores. Many businesses fall into this category. Those who have good credit scores may get rate hikes as credit companies make a desperate last-minute attempt to capitalize on the recession and the holiday shopping. Businesses can choose to do away with credit cards they do not use or choose to switch to other loan instruments.
The Bottom Line
Businesses, as well as consumers, are better off waiting until the new regulations take effect before opening new credit card accounts. Those who are considering bankruptcy now, however, should contact an attorney to review their options.
Questions and Answers
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The law firm of George R. Belche, Attorney at Law, located in Lawrenceville, Georgia, focuses on helping people resolve their financial problems through bankruptcy. Filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy allows you to eliminate or pay back a portion of most unsecured debt and helps you ease your financial situation.
The law firm of George R. Belche, Attorney at Law, located in Lawrenceville, Georgia, focuses on helping people resolve their financial problems through bankruptcy. Filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy allows you to eliminate or pay back a portion of most unsecured debt and helps you ease your financial situation.
The law firm of George R. Belche, Attorney at Law, located in Lawrenceville, Georgia, focuses on helping people resolve their financial problems through bankruptcy. Filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy allows you to eliminate or pay back a portion of most unsecured debt and helps you ease your financial situation.
The law firm of George R. Belche, Attorney at Law, located in Lawrenceville, Georgia, focuses on helping people resolve their financial problems through bankruptcy. Filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy allows you to eliminate or pay back a portion of most unsecured debt and helps you ease your financial situation.
The law firm of George R. Belche, Attorney at Law, located in Lawrenceville, Georgia, focuses on helping people resolve their financial problems through bankruptcy. Filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy allows you to eliminate or pay back a portion of most unsecured debt and helps you ease your financial situation.
Many people who enter the bankruptcy process worry about the fate of their credit. This is actually unnecessary as the bulk of credit damage happens before the bankruptcy process is even initiated. While no one wants the added hassle of rebuilding their credit after resolving debt troubles, doing so can put you leaps ahead of others in the credit game.
Americans are now filing Chapter 7 or 13 Bankruptcy to get their debts under control. Bankruptcy in itself is designed for debt elimination. Chapter 7 bankruptcy functions to cancel out unsecured debt such as utility or medical bills, credit card, etc. Chapter 13 Bankruptcy on the other hand is designed to give individuals more time in repaying all their debts.
Filing for bankruptcy is good news whenever you are struggling with your credit card debt, mortgage or medical bills. Bankruptcy laws help families and individuals in their debt struggles. You have two options on how to deal with your debt problems, Chapter 7 (debt elimination) and Chapter 13 (reorganization). Always remember that you can regain credit again after successfully filing your bankruptcy.
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One shouldn't be living like a movie star. Spending as much as you have and saving some money can help to lead a debt free life.
The law firm of George R. Belche, Attorney at Law, located in Lawrenceville, Georgia, focuses on helping people resolve their financial problems through bankruptcy. Filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy allows you to eliminate or pay back a portion of most unsecured debt and helps you ease your financial situation.
The law firm of George R. Belche, Attorney at Law, located in Lawrenceville, Georgia, focuses on helping people resolve their financial problems through bankruptcy. Filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy allows you to eliminate or pay back a portion of most unsecured debt and helps you ease your financial situation.
The law firm of George R. Belche, Attorney at Law, located in Lawrenceville, Georgia, focuses on helping people resolve their financial problems through bankruptcy. Filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy allows you to eliminate or pay back a portion of most unsecured debt and helps you ease your financial situation.
The law firm of George R. Belche, Attorney at Law, located in Lawrenceville, Georgia, focuses on helping people resolve their financial problems through bankruptcy. Filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy allows you to eliminate or pay back a portion of most unsecured debt and helps you ease your financial situation.
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