Des Moines, IA (Law Firm Newswire) December 3, 2012 – Credit card companies set their own interest rates, because the federal government allows them to do so.
Not many know that in 1980, the federal government passed a law that let national banks disregard state usury laws and pick whatever interest rate they wanted, that was a certain number of points above the Federal Reserve discount rate. Usury means lending funds at an exorbitant rate of interest. This means the law in most states cannot regulate credit card debt, leaving bankruptcy as the only way out for many explained Kevin Ahrenholz, an Iowa bankruptcy attorney.
While some choose to deal with the debt by hiring a debt management company, the debtor typically still has to pay the credit card company their fees and interest. This adds more debt to what was originally owed. The only difference is instead of having the credit card company to deal with, an individual would have to deal with the debt management company instead.
Will interest rates go down? Not likely, indicated Ahrenholz, because as recently as August 2010, credit card companies charged any interest rate, whenever they wanted. The federal annual percentage rate is 24% and some cards charge 29%. With interest rates that high, it makes it harder and harder for people to pay off their cards. If a debt is high enough and a debtor just pays the minimum payment every month, they will virtually ‘never’ get out of debt.
When it comes to filing for bankruptcy in the face of overwhelming bills that may include credit card debt, there may be some advantages to filing for a Chapter 13. This is a strictly personal decision, and a good Iowa bankruptcy attorney will point out those benefits, which include, but are not limited to, avoiding foreclosure, loan consolidation into one plan and the extension of certain tax obligations etc. Chapter 7 does not have the same opportunities.
Bankruptcy laws, no matter where one lives, are complicated. Do not try to file for bankruptcy without the help of a seasoned Iowa bankruptcy attorney. They know their stuff when it comes to outlining how the bankruptcy laws apply, what form of bankruptcy may be best, how to proceed and what to expect once bankruptcy protection has been granted.
Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact an Iowa bankruptcy attorney, Iowa bankruptcy lawyer, or set up an appointment, visit http://www.iowachapter7.com or call 1.877.888.1766.
309 Court Ave., Suite 805
Des Moines, IA 50309
Offices in Des Moines, Cedar Rapids, Waterloo, Mason City, and Vinton.
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