Senate investigating predatory tactics of credit card companies
Credit card debt is the first cause of bankruptcy for many americans every year.
Statistics show that debt is increasing at a greater rate than income.
It looks as though Senate will be analyzing credit
card company practices for increasing interest and late fees and that
direct legislation to minimize these actions could be put in practice
very soon. In fact, credit card companies, weary of these heightened
restrictions, are already beginning to promise to be clearer with their
policies toward consumers. They have vocally assured Senate that they
will lower penalties and make fine print more easily understandable.
Several studies have shown that these companies use
predatory tactics that insure the highest price interest rates and
skyrocketing penalties on late payments and default accounts.
Additionally, their billing structures allow for double-cycle billing,
using an average of your balance over two months to calculate your
interest, normally at a more significant amount to the consumer, and a
tactic known as “universal default” which allows companies to raise
interest rates in a consumer defaults on an account not related to the
credit card.
The purpose of new legislation against credit card
companies will be to prevent individuals capable of making only minimum
payments to be buried under mounts of additional interest and late
fees. As of right now, a definite timeline for new regulations has not
been established, but nevertheless it will result in improvements for
the consumer along with clear, more understandable terms and conditions.
Information for bankruptcy protection
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New Century filed for Chapter 11
2007 has been a horrendous year for subprime lenders
throughout the entire mortgage market in the United States. To date,
over two dozen individual subprime lending companies are either on the
cusp of closing or have already done so. On April 2, the financial
chaos claimed its most significant victim when New Century filed for
Chapter 11 Bankruptcy.
The second largest provider of subprime
mortgage loans in the United States, New Century lend out over $51
billion dollars in high risk mortgage loans in 2006 alone. While the
company initially enjoyed an abnormally profitable growth and expansion
from 2001-2005, seeing stocks reach a high of $66 in 2004, directors
were unable to salvage the company from the recently high amount of
defaults in mortgage loans that have left the industry severally
wounded.
In the midst of plummeting stock prices and a recorded $100
million dollars in liabilities, company officers must still deal with
an investigation by the Fed for possible securities fraud and
accounting errors. As part of the bankruptcy, New Century officials
would like to sell their loan operations to Carrington Capital
Management LLC for $139 million.
However, it remains to be seen if the
courts will allow such a transaction to take place.
Information for bankruptcy protection |
