Wednesday, February 23rd, 2011
A recent report from the Center for Responsible Lending suggests that the reforms introduced by the Credit CARD Act of 2009 are working to improve transparency in the marketing of credit cards to consumers.
In case you need a refresher course, the Credit Card Accountability Responsibility and Disclosure Act was designed to improve transparency from banks and other credit card issuers so that consumers could navigate the world of credit with greater ease and less financial distress. Here’s a look at just how much this consumer protection legislation has changed.
- Advertised credit card interest rates: Before the passage of the Credit CARD Act, the CRL reports, the discrepancy between the rates advertised by credit card offers and those that consumers actually paid had reached unprecedented highs. In fact, according to the report, between 2004 and 2008, the difference between promoted rates and real rates was at its greatest ever.
- Higher advertised rates means more honesty: Since the passage of the CARD Act, it seems, credit card offers have come branded with higher (and closer to actual) advertised interest rates.
- More transparency in pricing: According to the CRL, new rules governing the way credit cards can advertise their interest rates has led to the exposure of as much as $12.1 billion in annual fees. In other words, credit card companies are now presenting more honest pictures of how much their products cost consumers.
- Interest rates on credit cards constant: Despite the increases in advertised interest rates, the report shows, consumers have not actually paid more in interest since the passage of the CARD Act. This suggests that, rather than increasing the cost of credit card products, the new laws simply made those costs more readily apparent to consumers.
- Credit card offers constant: The CRL notes in its report that direct-mail offers of credit products have been extended at a volume “consistent with economic conditions,” suggesting that, while the overall total may have fallen since boom times, the drop-off can be attributed to the tight economy and not to restrictions imposed by the new law.
What Does Better Transparency Mean for You?
As a consumer, how can you expect to benefit from the changes that have been spurred by the passage of the Credit CARD Act? The CRL lists a few ways:
- Better transparency means more competition: According to the CRL, improved transparency among credit card issuers will spur positive competition – as banks abandon the trends of hidden fees and deceptive pricing, more banks and lenders should follow suit, which should eventually translate to lower consumer costs.
- Tighter rules do not mean less available credit: Though some critics of the CARD Act suggested that the restrictions on lending and increased disclosure requirements would mean a decrease in overall credit availability, numbers from actual research have not borne out those predictions.
Posted in Bankruptcy and the Economy, Credit Cards, Financial Literacy, consumer rights, legislation | Comments Off
Wednesday, May 12th, 2010
Two senators have proposed new regulations that may drastically change the way debt settlement companies do business.
The amendments are part of a larger financial reform bill currently being discussed and were jointly proposed by Senator Charles Schumer of New York and Claire McCaskill of Missouri, the Associated Pres reports.
The laws propose some major changes to how debt settlement companies collect fees, operate and the damages for which they are liable. The main points of the law include:
- No fees could be collected until a settlement is reached
- A cap on fees charged. Most companies charge consumers a percent of their debt for the service. Some companies may charge 20 percent of the debt, but the proposed cap would likely be much lower.
- More disclosures from companies to consumers, including costs and services to be performed
- No monthly fees
- Consumers would be able to cancel a debt settlement contract and receive a complete refund of fees
- More regulatory powers of the industry for the Federal Trade Commission
- Companies would be subject be subject more punitive damages liability during civil lawsuits
As of right now, these are only proposals for a bill that has not yet passed, and changes could be made. The proposals would not affect any bankruptcy laws.
Posted in Bankruptcy News and Events, Debt Settlement, legislation | Comments Off
Saturday, May 8th, 2010
The New York Times reported this week that the U.S. Department of Labor has announced plans to better enforce corporate compliance with worker safety, wage and employment equality laws. There is some hope that this move will provide extra protection to workers filing bankruptcy.
The measure will reportedly target two major problems in the workplace: Improving safety and security on the job; and the improper classification of employees as contract workers. If implemented, here’s how the new measures are likely to work:
- To prevent safety violations: If and when the new rules become effective, employers would reportedly be required to develop plans for maintaining workplace security and eliminating safety hazards in the workplace, implementing those plans and evaluating their effectiveness.
- To prevent improper employee classification: Companies that have contract workers on their payroll, according to sources, would be required to compose written explanations of the reasons behind that classification and share those explanations with the government and the employees. The article indicates that some companies improperly classify workers in order to avoid Social Security taxes and benefit payments.
Likely Changes to Workplaces
The Labor Department’s proposed changes are still in the development stage, and once they’ve been finalized businesses will have an opportunity to respond, meaning that it’s likely to be at least a year before any changes are actually implemented.
And, as the article notes, many business groups are less than thrilled at the prospect of stricter regulations. One detractor apparently asserted that stricter requirements will mean more work for employers, but might not lead to any tangible improvements in safety or rule compliance.
Bankruptcy and Your Job
It’s important to remember, too, that you are protected from more than just hazardous conditions at work. While credit checks are sometimes used in the hiring process of employee, your decision to file bankruptcy shouldn't affect your employment status with an employer.
If you’re concerned about a personal bankruptcy filing affecting your job, consider consulting with a local lawyer about what your rights are. And, if you’re otherwise in good standing with your employer, it may be wise to set up a private meeting with your supervisor to disclose your plans and your reasons, and reinforce your commitment to your work.
Posted in Bankruptcy and the Economy, bankruptcy on the job, legislation | Comments Off
