The Card Act of 2009 And Its Effect On Filing Bankruptcy

The Card Act of 2009 And Its Effect On Filing Bankruptcy "In 2009, the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 was enacted by Congress. This measure, also known as the Card Act of 2009, was created to further regulate the interest rates charged by credit card companies. The intent of the law was to prevent credit card companies from arbitrarily increasing interest rates and charging inactivity fees. Recent reports indicate that this legislation will cost credit companies $390 million in fees. Due to these new regulations, credit card issuers have scrambled to develop replacement programs to recoup lost fees. According to a recent report by a news agency, the Card Act of 2009 will eliminate a number of hostile practices employed by credit card companies, but will result in an equal number of unfriendly, unregulated practices.Credit card debt is one of the leading causes of bankruptcy filings today. Most Americans maintain an average credit card balance of $16,000. Prior to the Card Act of 2009, when a debtor fell behind on credit card payments, the creditor would increase the interest rate, hastening the debtor's default. It almost seems absurd that consumers must pay more interest the worse their credit is. Their inability to pay their expenses is due to the fact that interest is crippling their overall budget. This is a common refrain among individuals who file for bankruptcy.Now that it's 2011, creditors have discovered ways to recoup the revenue they lost due to the 2009 Credit Card Act. Many consumers are unaware that this is occurring. Many credit cards now impose inactivity fees, debit card annual fees, the elimination of rewards programs, and the limitation of debit card transactions for some cardholders. They have also lowered many credit limits and canceled credit card accounts for those with poor credit. Even though banks are resting on mountains of cash from the Federal Reserve, they are not lending it out because the risk is too great. Numerous Americans have extremely high debt-to-income ratios, which were acceptable in 2006 but are no longer the norm.With so many people relying on unsecured credit to make ends meet, it is simple to understand why so many are forced to file for bankruptcy. Simply ask any bankruptcy counsel, and they will have hundreds of examples of how credit card interest rates pushed debtors into bankruptcy. People must realize that banks exist to make money, despite what their advertisements may suggest. Some of the negligent lending practices of the past, which forced Americans to declare bankruptcy in order to save face, should be attributed to banks. For consumers, avoiding paying high interest rates to credit card companies can be extremely liberating. If declaring bankruptcy is the only way to break the cycle, then it is well worth it, and you should contact a bankruptcy attorney as soon as possible.
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