California Bankruptcy Attorney Blog

As Costa Mesa debt settlement attorneys, we have been guardedly optimistic about the CARD Act for some time. This credit-card reform bill was passed last year and some of its provisions took effect in August, but the remainder became active Feb. 22. According to an article by McClatchy Newspapers, the law may help consumers avoid some of the most costly deceptive practices by credit card companies. However, other abusive practices remain unchecked, and credit card companies have already raised their rates to compensate for anticipated losses.

As of last August, credit card companies could not raise interest rates without 45 days' notice, and had to send bills at least 21 days before the payments were due. This week's new provisions add to those protections considerably. Companies may no longer raise customers' interest rates on existing balances until a bill is at least 60 days overdue. If a cardholder pays on time for six months after this happens, the credit card company must drop the interest rate back to its original size. Among other things, this will stop the practice of "universal default," in which a credit card company raises rates on all cards because of a late payment on one card. The article estimated that this alone will save U.S. cardholders $10 billion a year. Other provisions include:

• A requirement to get permission before allowing cardholders to spend over their credit limits.
• A prohibition on a practice called "double-cycle billing," in which the credit card company charges interest on the average daily balance over the past two months to determine the interest charge, rather than using the current month's balance.
• A requirement to put any payment over the minimum payment toward the balance with the highest interest rate. This applies only when there's more than one balance, of course.
• For cards with a high annual fee, a limit on that fee in the first year to no more than 25% of the total credit limit.

When the Act was passed, our Fontana debt settlement attorneys were disappointed that it didn't go further. Nonetheless, we believe this will help many credit-card holders avoid becoming financially entrapped by provisions that they didn't expect and had little way to learn about. Double-cycle billing, for example, was perfectly legal before the CARD Act, but not at all intuitive and arguably deceptive. By reducing that kind of deception in credit card lending, the law will give people fuller information with which to make good decisions about their money. It will also reduce the amount of money companies can charge their customers, which will slow the growth of debts. In the long run, this may actually benefit credit card companies, because it may keep their customers from getting so deep into debt that they're forced to file for personal bankruptcy.

Continue reading "CARD Act Protecting Buyers From Unfair Policies Finally Takes Effect " »

Part of our job as Riverside personal bankruptcy attorneys is to explain the ripple effects that our services can provide. At this time of year in particular, that means explaining the tax implications of a bankruptcy, loan modification or other major financial move. As a New York Times blog post set forth Jan. 29, taxes may look substantially different this year for people who underwent major financial changes in 2009. For many of our clients, this includes cashing out investments, having debt forgiven or losing a job.

People who settled debt without bankruptcy, were foreclosed on or had principal forgiven on a loan may be surprised to learn that the forgiven debt is taxable. That's because the IRS counts it as "income," even though a lack of income is likely what led to the debt forgiveness in the first place. There are several exceptions to this rule. Debts discharged in bankruptcy don't count as income. Thanks to a 2007 law, the federal government will also ignore forgiven debt that comes from a foreclosure or forgiven mortgage on your primary home, as long as it doesn't exceed $1 million for individuals and $2 million for married couples. However, this only applies in specific circumstances, so you should talk to a tax professional before making decisions. Finally, you can avoid paying taxes on forgiven debt if you can convince the IRS that you're insolvent, which means your debts exceed your assets.

Unfortunately, many of our clients who get into financial trouble make financial moves that will also complicate their taxes. Cashing out retirement savings, for example, will mean paying income tax on what you took out as well as a 10% penalty. Selling investments can qualify you for a capital gains tax. And unemployment insurance payments are taxable after the first $2,400. The plus side is that if you lost income in 2009, you will drop into a lower tax bracket. And very high medical expenses, which bring too many of our clients into our office, are tax-deductible under certain circumstances.

Our Lakewood consumer bankruptcy attorneys can't overemphasize the importance of understanding these rules before you file your taxes. Innocent mistakes may not be harshly punished, but by failing to take the steps needed to show you're insolvent, for example, you could be locked into higher taxes than you need to pay. Worse, you could end up in a tax debt situation that you'll need professional help to change. To make matters worse, recent debt to the IRS cannot be discharged in bankruptcy. When working with clients, we provide individual counseling about tax implications of bankruptcy and other financial moves. We also counsel clients on related matters, like discharging difficult debts like student loans or unpaid child support.

Continue reading "Financially Distressed and Bankrupt People Should Plan Carefully for Taxes" »

As Fontana debt settlement lawyers, we know that the new year typically brings in a few people who have resolved to get their financial lives under control. Fortunately for those with credit card debt, a Dec. 30 article in the Chicago Tribune suggests that this may be an excellent time to settle that debt. As the economy goes downhill and unemployment rises, many people are having a hard time making their credit card payments. That means credit card companies are seeing more and more defaults -- in fact, the article says defaults are tracking the unemployment rate. And that, in turn, means credit card companies are hurting and eager to negotiate settlements with people who can no longer handle their debt -- even if that means the company gets less than the full amount.

The article suggests several ways to approach settling your credit card debt. The most direct way is simply to call the credit card company, explain your situation and request a reduction in your debt in exchange for paying it off quickly. However, negotiation is not for everyone, and the stress of debt can make some people shy. That's why the article also suggests a nonprofit credit counseling agency. These agencies may charge a fee, but they also do the negotiation for you, help you set up a payment plan and provide education on how to avoid overwhelming debt in the future. A third alternative is a debt settlement company, which the article recommended with reservations because they are for-profit companies that may be dishonest and will likely harm your credit. A debt settlement company uses missed payments as leverage to negotiate a settlement for a reduced amount.

We offer a fourth option: representation from a licensed Orange County debt settlement attorney. Like credit counselors, our law firm negotiates directly with creditors to settle debts, generally for less than the full amount owed. We can do this because credit card companies know that they could get nothing at all if the client is forced to declare individual bankruptcy -- and when bankruptcy lawyers are on the job, they get nervous. Once the debt is settled, we have partners who help follow up to ensure that official records reflect the settlement and that old debt won't come back to haunt you. And unlike some debt settlement firms, we believe it's part of our job to explain the financial implications of the actions we take on clients' behalf, such as taxes owed on forgiven debt.

Continue reading "Bad Economy Means Settling Credit Card Debt May Be Easier Than Ever" »

Our Fullerton fair debt collection lawyers wrote recently about a lawsuit by the state of Maryland against San Diego-based Encore Capital and its subsidiaries, including Midland Credit Management, for illegal debt collection practices. We were therefore not surprised to see an Oct. 4 article in the Toledo Blade about a lawsuit against the companies out of Ohio, alleging a different kind of legal violation. Andrea Schwartzentraub of Sandusky, Ohio sued Midland Credit Management and Midland Funding LLC for sending her a false affidavit that formed the basis of its attempt to collect $4,100 from her. As part of the case, the judge issued an injunction forbidding the companies from issuing the injunctions, a move that affects debtors and lawsuits across the U.S.

According to the article, the judge found that employees of Encore had routinely signed affidavits in support of lawsuits against debtors affirming that they had "personal knowledge" of the debts in question -- when they did not. Rather, the judge said, who signed the affidavits was "an entirely random act" based on when the documents came out of the printer. This makes all of the affidavits from these companies false, the article said, so the collection attempts were invalid and illegal. The decision could throw many other collection lawsuits from around the country into question, if they are based on the same false affidavits. Schwartzentraub's attorney said that millions already paid by debtors sued with the false documents may have to be paid back.

As Fontana debt collection abuse attorneys, we are pleased to see more consumers standing up for their rights in the face of abusive practices by debt collectors. Collection agencies have always had a cavalier attitude about following the law, and the current economic downturn is making it harder to collect, which has led to even more abuses. Debt collectors use these affidavits to start collection lawsuits, frequently inflating the amount and relying on consumers' ignorance of their rights or shame to keep them from objecting to the added amount. If the target does not object, the court can declare the debt valid without any further testimony or information. But as with all affidavits, the person signing must be telling the truth or the document is false and useless -- and consumers can fight and win their cases.

Continue reading "Ohio Judge Grants Injunction Stopping Allegedly False Affidavits From Debt Collection Giant" »

As Fontana debt settlement attorneys, we were pleased by recent news that one of the nation's largest banks will drop its mandatory binding arbitration requirement for customers with credit card, bank accounts and certain types of loans. According to the Associated Press, Bank of America dropped its binding arbitration clause from contracts with customers. The move most likely means that the bank will face more lawsuits, because the binding arbitration requirement meant their right to sue was waived. Under it, all disputes had to be heard by arbitrators, who are a bit like private-sector judges.

A Bank of America spokeswoman said the bank made the change after hearing from customers. However, the Associated Press said, the move came after two major groups of arbitrators stopped hearing consumer credit disputes. One of those groups, the National Arbitration Forum, did so after being sued by Minnesota Attorney General Lori Swanson for its ties to credit card companies and collection agencies, which Swanson said was unfair and deceptive to consumers. Congress is also considering banning mandatory binding arbitration clauses in credit card contracts. One expert interviewed in the article said Bank of America's decision was likely caused by these developments.

Mandatory binding arbitration has long been criticized by consumer advocates as unfair and anti-consumer. Arbitrators are supposed to be neutral, but because they often have professional ties to clients, are paid by the large companies involved in their cases, or both, consumer advocates say the deck is typically stacked against consumers. Furthermore, consumers must typically agree to arbitration and sign away their right to sue in the courts as a condition of signing up for a product or service. Some courts have declared this practice "unconscionable" and invalidated the agreements. Nonetheless, Bank of America's decision is good news for consumers. As Ventura debt settlement lawyers, we strongly prefer that credit card companies have access to the courts from the beginning, rather than having to fight an expensive legal battle just for a chance at suing in a fair and open court.

Continue reading "Bank of America Drops Mandatory Arbitration Requirement for Credit Card Customers" »

As Riverside County consumer bankruptcy attorneys, we were disturbed to read an Aug. 23 Associated Press article suggesting that more and more senior citizens are forced to file for bankruptcy. According to the AP, older people are being affected by the same bad economy as everyone else -- but because they have fixed incomes, they often have less ability to recover. Seniors who expected to live off retirement accounts have seen the value of those accounts plummet, and many lost a second resource when the housing market crashed, taking away equity in their homes. When an emergency strikes, the article said, many seniors with modest incomes turn to credit cards and rack up unsustainable debts.

In fact, the AP said, a study by think tank Demos found that credit card debt has risen 26% since 2005 among seniors 65 and older. In that study, participants reported an average debt of $4,000 for medical expenses alone. And according to the AARP, Americans age 55 and older are now the largest age group to file for bankruptcy protection, with 23% of all bankruptcy filings in 2007. For people ages 75 to 84, bankruptcy more than quadruples. A debt counselor interviewed for the article said she regularly sees women in their 70s and 80s at her counseling center in South Dakota, attending counseling sessions required before they may file for individual bankruptcy. Many had medical bills they couldn't pay with their limited incomes, the article said.

It's dismaying to us as Placentia personal bankruptcy lawyers to see older people forced into bankruptcy by circumstances that are largely out of their control. Retired and older people, especially those with health problems, are missing two of the most important tools available to people trying to get out of debt: time and a flexible income. We routinely counsel our debt settlement clients to consider increasing their incomes and decreasing expenses. Those options are just not available for many seniors, who have trouble getting jobs even if they can work. Furthermore, debt-settlement and Chapter 13 bankruptcy payment plans and rebuilding credit can take years -- years that older people may not have. These circumstances set older people up to spend their golden years struggling with debt.

Continue reading "Economy and Housing Crash Drives Increasing Debt and Bankruptcy Problems Among Retirees " »

The first of the new rules for credit card companies under the 2009 CARD Act take effect Aug. 20 -- and consumer advocates say interest rates have been hiked dramatically to compensate, ABC News reported Aug. 18. Credit card companies downplayed the change, denying that it was driving credit card rate increases or saying it was just one of many factors, including a bad economy that's causing a record number of defaults and consumer bankruptcies. Consumer advocate Samir Kothari, co-founder of BillShrink.com, disagreed, pointing out that it makes economic sense to find new revenue sources when you expect to lose an old one.

Regardless, the article said, interest rates grew dramatically in the first seven months of 2009. In fact, a study found that some cards have raised their interest rates for purchases and balance transfers by as much as 50%. The rate hikes apply to all borrowers, regardless of whether they've missed payments or have a history of irresponsible behavior. Opposition to these practices was part of what drove the CARD Act, most of whose provisions take effect next February. Among the rules that start Aug. 20, however, is one requiring the cards to send out bills 21 days before they're due, up from 14 days, which is expected to reduce late fees caused by delays in the mail. Another new rule triples the amount of advance notice cardholders get before a rate hike, bringing it to a total of 45 days.

As Orange debt settlement attorneys, we applaud efforts to increase the spotty regulatory oversight of the credit card industry. The new rules taking effect Aug. 20 will help many cardholders avoid going even deeper into debt, which will ultimately help them avoid defaulting on their card payments or going into bankruptcy. However, we believe more could and should be done to check the worst excesses of the card industry. As we have written here before, cardholders with no history of lateness or over-the-limit spending have recently found their credit ratings hurt by credit card companies' belt-tightening, including lowered credit limits and penalties for shopping at the same stores as less responsible cardholders. These practices ultimately hurt the cards as well as the cardholders by putting them in financial stress that encourages bankruptcy or debt settlement.

Continue reading "Credit Card Rates Hiked Yet Again Before CARD Act Consumer Protections Take Effect " »

A medical crisis can lead to financial ruin even for people who have health insurance, the New York Times reported June 30. The article highlights an important part of a study released in mid-June, which found that medical bills are responsible for the majority of bankruptcies -- and the majority of those medical bankruptcy filers had insurance. Against the backdrop of President Obama's attempt to reform the way the United States handles health care, the Times looked at one such bankruptcy filer.

Lawrence Yurdin of Austin, Texas, bought a limited-benefits health insurance policy through his employer. He also had an irregular heartbeat, a sign of potentially serious cardiac complications. When he had two heart procedures in 2008, the hospital estimated that his share of the cost would be a few thousand dollars. But when he put in the claim, he discovered that his $150,000 hospital benefit was mostly for room and board -- the health care that brought him to the hospital in the first place was not covered. In fact, according to the Times, Yurdin's insurance would have paid for months of bed and board, but not a lab test or surgery. On the advice of a bankruptcy lawyer, Yurdin and his wife have filed for bankruptcy protection.

As Azusa bankruptcy lawyers, we hear far too many stories like these. When the language of a health insurance policy fools even the hospital billing department, it's clear that the policy is not as clear and honest as it should be. The result is that thousands of Americans are driven into consumer bankruptcy filings each year -- and that number is growing. Although many people feel ashamed or reluctant to consider a bankruptcy, nobody chooses to get sick. When it happens anyway, and they don't have the comprehensive medical insurance they need to cover the cost, they should never be ashamed to protect themselves by speaking with a Los Angeles County bankruptcy attorney.

Continue reading "Three Quarters of People Bankrupted by Medical Problems Had Health Insurance" »

A farmworker couple has won $500,000 in a lawsuit against debt collectors who harassed and threatened them, the Silicon Valley Mercury-News reported June 2. Manuel and Luz Faustos of Gonzales, south of Salinas, sued collection agency Credigy Services Corp. for numerous phone calls and mailings that threatened to ruin their credit and garnish Manuel Faustos' wages over a debt they had already paid. In a federal trial in San Jose, the couple won $500,000 in damages for Credigy's multiple violations of the Fair Debt Collection Practices Act.

Manuel Faustos is a 62-year-old naturalized citizen who works as a forklift operator. He and his 59-year-old wife, Luz, speak mostly Spanish. Their financial trouble began 17 years ago, when they signed up for an expensive credit card whose balance kept increasing despite regular monthly payments. They managed to pay it off with help from a debt settlement agency -- but seven years later, they got a call from Credigy. The Georgia company told Luz Faustos that they owed $17,000 on the card. Over the next two years, the company called the couple more than 90 times, threatening to take their home and savings, ruin their credit and garnish Manuel Faustos' wages. The jury in their eventual lawsuit awarded the Faustoses $100,000 in compensatory damages and $400,000 in punitive damages, payments intended to punish severe wrongdoing.

As Los Angeles County abusive debt collection attorneys, we are delighted to see such a strong blow struck in favor of victims of abusive debt collectors. The Fair Debt Collection Practices Act forbids debt collectors from several of the behaviors noted in the article -- threatening legal action the collector can't actually take, seeking amounts not owed and refusing to identify themselves. In fact, the law puts substantial restrictions on debt collectors, including specifying the hours during which they can call and restrictions on the number of calls. Unfortunately, debt collection agencies routinely violate those laws because they know most consumers don't understand their rights.

At Howard | Nassiri LLP, we stand up for those rights by suing debt collectors who violate the Fair Debt Collection Practices Act. Our Murrieta debtor protection lawyers represent both individuals and large groups of people victimized by the same debt collector. Under the law, consumers subjected to inappropriate practices like calls at work, profane language and false threats have the right to sue the debt collector for $1,000 plus attorney fees and all of the costs caused by the illegal conduct (such as missed work). Like the Faustoses, plaintiffs in a Riverside debt collection harassment lawsuit can also claim punitive damages for intentional lawbreaking or egregious bad behavior.

If you're ready to stand up against debt collectors who break the law, call Howard | Nassiri today for a free, confidential consultation. You can contact us online or reach us toll-free at 1-800-872-5925.

Congress passed a law this month adding new regulations limiting anti-consumer behavior by credit card companies. Our Chino debt settlement attorneys have written here a few times before about the rise over the past year of unfair practices like changing interest rates, lowering credit limits and other adverse actions against cardholders who have no record of payment problems. In response, Congress passed the CARD Act, a law limiting certain behaviors by credit card companies, and President Obama signed it May 22. Consumer groups are pleased by the law, but warn that it doesn't end every abusive practice -- and could encourage more abuse in the months before it becomes effective.

The Wall Street Journal's Washington Wire blog reported some of the details of the bill. Perhaps most important for cardholders, credit card companies can no longer apply an interest rate change to an existing balance, unless that balance is more than 60 days overdue. They must disclose changes in terms 45 days before the changes take effect, disclosures must be clearer and bills should be sent out at least 21 days before the due date. Any payment above the minimum must be applied to the highest outstanding balance. And they cannot charge fees for transactions over a credit limit unless the cardholder chooses that feature.

These are all good features. But consumer groups, and our own Orange debt settlement lawyers, wish it went farther. Most importantly, we wish the law had set a cap on interest rates for bank-issued cards, which can go as high as 30 to 40 percent. The banking industry had argued that this would threaten their industry, but interest rates on cards issued by credit unions have been capped at 15% for decades, with no ill effects. We also wish it had banned the practice of raising interest rates and lowering limits based on the cardholder's record with other lenders, or worse, based on a good cardholder's choice to shop at stores frequented by irresponsible cardholders.

We also wish Congress had mandated the new rules take effect s soon as possible, rather than giving credit card companies nine months to implement them. Already, it's clear that they're using those nine months to squeeze as much revenue as they can out of cardholders, raising interest rates dramatically and lowering credit limits on people with no history of late payments or overspending. These moves punish responsible borrowers in the short term, raising their expenses at a time when few Americans have the resources to deal with another expense. They also do long-term damage to cardholders' credit scores, which take a hit every time available credit goes down. These practices raise profits in the short term, but by driving cardholders into financial problems and possible bankruptcy, they could actually cost the card companies more in the end.

At Howard | Nassiri LLP, we represent clients who are in debt over their heads because of a combination of bad decisions, bad luck and unethical behavior by creditors. Our Los Angeles debt settlement lawyers negotiate with creditors to end harassing phone calls and settle your debt once and for all with a lump-sum payment. Frequently, creditors will accept less than you owe because they know it's more than they would stand to receive if they drive you into bankruptcy. Once your debt is settled, we can help you set your credit record straight and advise you on the tax and credit consequences of the transaction.

If you know you have more debt than you can handle and you're ready to take action, you should contact Howard | Nassiri today for a free, confidential consultation. You can contact us online or call us toll-free at 1-800-872-5925.

Our Chino Hills debt settlement lawyers were pleased to see a recent press release from our partner, Morgan Drexen Integrated Legal Systems. Morgan Drexen is an essential part of our services for our debt settlement clients, providing administrative and technical support that backs up our legal services. The press release from Morgan Drexen, which has been picked up by publishers around the globe, outlines the services the firm offers to support attorneys like us, who represent consumers who need help controlling and getting rid of their debt.

Our Anaheim debt settlement practice is aimed at people who are struggling with an overwhelming amount of unsecured debt -- debt not connected to physical property like a home or car. Credit cards and medical bills are the two more common types of unsecured debt in the U.S. Rather than declare bankruptcy, which haunts a consumer's credit for a decade, our debt settlement clients retain us to help them negotiate with their creditors for a lump-sum payment that ends their debt. The consumer gets an end to stressful phone calls and massive debt; the creditor gets a guaranteed payment that it might not get in a consumer bankruptcy.

Unfortunately, more and more consumers must consider debt settlement or bankruptcy because of the economic downturn. Credit card companies extend lots of credit when the economy is good. Now that it's not so good, they are reducing credit lines, raising interest rates and sometimes closing accounts, even for customers with no history of payment problems. For people who are struggling with job losses, lower incomes or serious medical problems, this can push them from barely making minimum payments to not being able to pay at all. Debt settlement offers an alternative that harms their credit scores less and ends harassment by creditors.

Howard | Nassiri LLP is proud to partner with Morgan Drexen to help consumers reduce serious unsecured debt, enforce consumers' rights to be free of harassment and help them build a healthy financial future. In addition to offering tough debt settlement negotiations, our firm also offers Orange County Fair Debt Collection Practices Act lawyers, who sue over violations of federal debtors' rights laws by aggressive debt collection agencies. If you or someone you care about is struggling with these problems and you'd like to learn more about your legal options, we can help at no initial charge. To set up a free, confidential consultation, please contact us online or call us toll-free at 1-800-872-5925.

As Anaheim fair debt collection lawyers, we were pleased to see that a federal appeals court has recently made it just a bit harder for credit agencies to go after the wrong debtor. According to a May 1 article in the Los Angeles Times, the Ninth U.S. Circuit Court of Appeals has ruled that credit reporting agency Experian Information Systems and debt collector Pacific Creditors Association violated the Fair Credit Reporting Act and privacy laws when they went after consumer Maria Pintos. The ruling may lead to better enforcement of the Fair Credit Reporting Act's provisions on buying and selling credit histories, the newspaper reported.

Pintos sued the agencies after a case of semi-mistaken identity. Her son had bad credit, so she bought him a car and signed over the title after he paid her back for it. The car was later towed and impounded, and the son did not pay the fees. The towing company sold the debt to Pacific, the debt collector. Realizing that Pintos was more likely to pay than her son, Pacific or the towing company requested and received her credit information from Experian. This began seven years of embarrassing phone calls, many reaching Pintos at work, in which Pacific employees threatened to run her credit. With help from a legal aid organization, she sued for violations of the Fair Credit Reporting Act and privacy rights laws. In its decision, the Ninth Circuit said Experian and Pacific violated the FCRA because Pinto was not a party to the transaction between her son and the towing company.

The decision means Pintos is entitled to a trial in a lower court on her claims against the two companies. But perhaps even more importantly for us as Santa Ana debt collection violation attorneys, it could also lead to more careful behavior from credit reporting agencies. Credit reporting agencies are already required to follow the FCRA, but as an attorney in the article notes, they routinely ignore it because few consumers have the resources to hold them responsible for violations. This has real consequences for victims -- ruined credit, missed opportunities and harassment by predatory debt collection agencies. Holding credit agencies responsible for their actions will cut down on these injustices and score a victory for consumers.

Howard | Nassiri LLP protects consumer rights through our Fair Debt Collection Practices Act litigation practice. The FDCPA requires debt collectors to be honest with consumers, refrain from bullying or abusive tactics, avoid calling them at work on request and more. As with the FCRA, debt collectors routinely violate the FDCPA, relying on ignorance of their rights and embarrassment to keep consumers from fighting back. But with our Fullerton debt collection attorneys by your side, you can not only hold them responsible for violating the law -- you can also win back the costs of their illegal actions, as well as $1,000 for each violation and attorney fees. Our firm handles individual consumer lawsuits as well as class actions uniting large groups of consumers harmed by the same unfair practices.

If you're being illegally harassed by a debt collector and you'd like to learn more about your legal rights, please contact Howard | Nassiri online or call us toll-free at 1-800-872-5925 for a free, confidential consultation.

Thanks to the bad economy and recent interest rate hikes from credit card companies, more and more cardholders are missing monthly payments and going into default. Now, according to the Orange County Register's Mortgage Insider blog, credit card companies are taking that a step further and writing off more debt as unrecoverable. The unrecoverable debt, called chargeoffs by the industry, is already at record levels, according to a Reuters story the blog linked to. And analysts expect it to get worse, Reuters reported, climbing to 9% or 10% by the end of 2009, up from 6% to 7% in December of 2008.

In response, Reuters said, credit card lenders are lowering credit limits, ending rewards programs, raising interest rates and adding new fees. That's true even for cardholders who haven't missed a payment, which has generated widespread anger. From a purely financial standpoint, these moves make sense -- until you consider the bad economy behind both sides' financial problems. Raising cardholders' interest rates could generate more revenue -- if the cardholders can afford the new minimum payments. If they cannot, the card company gets no revenue at all. And of course, responsible customers unhappy about the way they are being treated may simply stop using their cards.

As Orange debt settlement attorneys, we work every day with people struggling with high credit card debt. In some cases, high interest rates drive our clients' debt out of control very quickly. Arbitrary fee hikes and rate increases don't help, because they can mean the difference between barely making a payment and not making it at all. With unemployment and home foreclosure at record highs, cardholders may have limited options for dealing with a sudden increase in their debt. The result: default and chargeoffs for the card issuers and massive financial problems for the cardholders.

Howard | Nassiri LLP's Garden Grove debt settlement lawyers help clients get control of overwhelming debt from credit cards, medical bills and other debts not secured by physical property without declaring bankruptcy. We aggressively negotiate with creditors to stop harassing phone calls and get the debts discharged, often for a lower amount than our clients owe, in exchange for a lump sum. If you or someone you love feels overwhelmed by debt, we would like to help. To set up a free, confidential consultation with our Anaheim debt settlement attorneys, please contact us today.

Congress is considering legislation aimed at curbing abusive behavior by credit card companies, the New York Daily News reported April 23. The legislation is backed by President Obama, who met with credit card companies that day to ask for their cooperation in reforming anti-consumer practices, simplifying the information offered to consumers and establishing tighter regulation. The president said he wants credit card companies to be profitable without engaging in practices he believes are abusive. Meanwhile, both houses of Congress are considering a bill that would address some of those goals as a "Credit Cardholders' Bill of Rights."

The Daily News ran a separate article summarizing the proposed new laws. Its provisions address recent practices by credit card companies that have stirred up widespread consumer anger, including arbitrary increases in interest rates and lowering of credit limits for clients who haven't missed any payments or gone over limits, simply because the card companies' risks are greater in a bad economy. The Senate version would: • Prohibit credit card companies from applying an interest rate hike to an existing balance • Increase the required notice of an interest rate hike from 15 days to 45 days • Let consumers set their own credit limits and stop them from charging fees when customers exceed that limit • End "double cycle" billing, in which companies charge late fees for on-time payments by applying the payment to a new billing cycle • Prohibit intentional credit card offers to minors who are not emancipated • Prohibit adding the high fees on "subprime" cards to the balances on those cards • Establish standard definitions of common terms to prevent misleading advertising

As Chino Hills debt settlement attorneys, we hope this passes in a meaningful form. As things currently stand, credit card companies are permitted to do anything they want to customers' cards, as long as they give 15 days' notice before changing interest rates. Because credit scores depend on the customers' amounts of available credit, many of the practices mentioned above have a substantial negative effect on customers' credit. Good customers are penalized for a bad economy, or the irresponsible behavior of people who live and shop near them. Meanwhile, substantial changes to credit limits and interest rates can put people with higher balances into uncontrollable debt, taking away the hope that they can pay it off alone.

At Howard | Nassiri LLP, we work every day with people who feel overwhelmed by their debts, including credit card debts as well as medical bills and other forms of debt. Our Placentia debt settlement attorneys know that creditors would rather get some payment than nothing at all, which is what they can expect if they push our clients into bankruptcy. We use that knowledge to negotiate with creditors to discharge your debt completely, in exchange for a lump-sum payment. We can also help clients sue over unfair practices that violate the federal Fair Debt Collection Practices Act.

If you need help controlling ballooning debt, from a credit card or any other source, you should speak to Howard | Nassiri's Corona debt settlement attorneys as soon as possible. To set up a free, confidential consultation, please contact us online or call us toll-free today at 1-800-872-5925.

As we've blogged here before, credit card companies are responding to the recession with unilateral changes to cardholders' accounts that many find unfair. Among those changes are interest rate hikes to as high as 30%, which are being applied even to cardholders with no history of payment problems. Columnist David Lazarus of the Los Angeles Times wrote March 15 that Senator Bernie Sanders, an independent from Vermont, has responded with a dramatic proposal: A bill that would limit interest rates on all consumer debt to just 15%. Sanders called his proposal, a direct response to the credit cards' recent rate hikes, "a national usury law."

The idea has precedent, Lazarus said. States are currently free to make usury laws -- which limit the interest a lender can charge -- and many have. However, credit card companies haven't had to comply with them since 1978, when the U.S. Supreme Court ruled that national banks could set their interest rates using the limits that their home states allowed. This triggered a race to set up shop in states with no usury laws at all. Meanwhile, federally chartered credit unions have always operated using an interest rate cap -- set at 18% since 1987 -- and Lazarus noted that they have survived.

Passing the bill would be an uphill battle against the financial industry and its supporters in Congress. But as a La Mirada debt settlement attorneys, we would welcome such a law. The recent interest rate hikes by credit card companies are partly a response to rising defaults by cardholders -- but another part is a response to financial problems in other divisions of the companies, including mortgage lenders. Raising interest rates, lowering credit limits and adding fees punishes cardholders for the bad bets those divisions made. This is especially unfair to cardholders who have no payment problems -- but whose credit score is harmed by the changes to their cards.

In our Southern California debt settlement practice, we help clients whose debt has spiraled out of control, in part because of high credit card interest rates. When interest rates are jacked up without reason or appeals, they raise the cardholder's minimum payment as well -- which can be overwhelming to someone who's already struggling to make payments. Our Placentia debt settlement lawyers help clients in this situation by negotiating a fair lump-sum payment to the card that ends their debt once and for all and helps them avoid declaring bankruptcy.

If this sounds like your situation and you know you need help, please Howard | Nassiri can tell you more at a free, confidential consultation. To schedule one, please contact us online or call toll-free at 1-800-872-5925.