Consumer Law

High Rate Loans Might Be Limited By A New Senate Bill

By Douglas Jacobs, California Bankruptcy Attorney

High rate loans continue to plague consumers.  But, new legislation, introduced by Senator Sheldon Whitehouse from Rhode Island, will limit creditors from collecting on high-interest loans in bankruptcy court.  The bill has gone to the Senate Judiciary Committee for review, according to an article from Bloomberg.

As proposed, this bill, the ?Consumer Credit Fairness Act,? will cover a wide spectrum of abusive consumer loans including credit cards, payday loans, car loans and overdraft loans.  The idea is to make it harder for the creditors to collect and therefore force them into negotiating better terms with debtors.

In theory, this legislation will also limit bankruptcy filings since debtors will be able to negotiate better terms for their debts.  If it works that way, it might be a win-win for both creditors and debtors: a negotiated settlement is often better than forcing a bankruptcy.   Of course that will depend on whether such legislation actually will turn around the credit industry?s reluctance towards negotiation.  We?ll just have to wait and see.

Full post as published by Credit Law Network on June 14, 2009 (boomark / email).