Bankruptcy bill provides no interest rate relief
By Cathy Moran, California Bankruptcy Lawyer on Jun 8, 2007 in General Bankruptcy Information
An unreported exchange at yesterday’s hearings on credit cards held by the House Financial Services committee had credit card executives questioned by Congressman Perlmutter. He asked if credit card interest rates had declined since the passage of the Bankruptcy “reform” act in 2005 made it more difficult to file bankruptcy. To a man, the executives replied that there had been no reduction in credit card interest rates.
Which of us is surprised?
One of the catchy, but utterly false, pitches for the bill was that losses caused by bankruptcy filings constituted a “$400 per family tax” on American households. The promise was that interest rates would fall if the risk of loss to lenders was reduced by restricting bankruptcy relief.
Bankruptcy is a symptom of financial distress. Limiting bankruptcy relief does not insure less financial pressure on American families and, as we see, it does not produce a reduction in obscenely high interest rates.
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