Call to Action

A new bankruptcy law was passed last April and will take effect in October. It makes it much more difficult for borrowers to wipe their slate clean of debt during bankruptcy proceedings. Instead, an increasing number of debtors will be required to liquidate assets to pay off their debt, or negotiate with lenders for new tems of repayment.

Two bills are being proposed in an attempt to increase consumer protection. The first addresses something referred to as automatic overdraft protection programs. An increasing number of banks have begun to cover overdrafts for a flat fee of $25 to $35. The overdraft is covered irregardless of its source. It could be caused by a check written on your account, an ATM withdrawal, or a debit card transaction. The banks claim to be doing the consumer a favor; saving them from paying the bank fee and the bad check fee charged by the retailer. Supporters of the bill, Consumer Overdraft Protection Fair Practices Act, object to the service being rendered without the informed consent of the consumer. The bill supports the practice of informing the consumer and obtaining their written consent before applying the service.

The second bill addresses something called universal default. If you have ever experienced a sudden hike in your credit card interest rate and if you have made every payment to that credit card account on time, you have most likely been a victim of universal default. You see the credit card companies reserve the right to adjust interest rates if they discover you have been late paying other creditors. These other creditors can be your telephone company, cable service, or utility company. Sometimes your interest rate can sky-rocket from 8.99% to 28.99% overnight. The Consumer Credit Card Protection Act of 2005 would stop this practice, as well as attempt to limit the rate increase to new charges only, rather than to the entire outstanding balance.

Of course the best practice is not to use a credit card, and most definitely not to carry a balance from month to month. But if you have a balance, or are just inclined to support consumer protection, contact your US Senator(s) and US House of Representative(s), the legislative coalition for your area. You can be sure the lobbyists for the credit card companies will be.

Speak now or forever hold your peace!