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A Credit Card Company Bailout? Maybe...

The Castle Law Office provides bankruptcy assistance for citizens all over the St. Louis area, including Illinois. We have helped thousands of St. Louis citizens get through the bankruptcy process while still being allowed to keep their homes and other assets. With the economic situation being what it is, we realize that many Americans are one paycheck away from being out on the street. Accidents, illness or job loss can cause anyone to find themselves in an untenable financial situation. If you or a loved one is suffering under the weight of substantial debt, contact the Castle Law Office for a free legal consultation today.

U.S. Treasury Secretary Henry M. Paulson Jr. said he wants to expand the government's $700 billion bailout program to include credit card, student loan and car loan companies, part of an effort to ensure that households and businesses have access to a broad array of borrowing options.(The Washington Post, 11/12/08)

It is entirely possible that many Americans reacted to this news with barely concealed outrage. The irony is substantially thick here. An industry that makes credit ridiculously easy to get and jacks up the rates to just short of usury, an industry that has directly contributed to the bankruptcy of hundreds of thousands Americans, is now running scared to the Federal Government. They want to get bailed out with, irony of all ironies, taxpayer money.

You would think that as bankruptcy attorneys, we here at the Castle Law Office would be against anything that gives the credit card industry even more money from taxpayers, especially when you consider that Americans had $971 billion worth of credit card debt at the end of September. But believe it or not, we think that a credit card industry bailout is a great opportunity for real reform for how credit card companies do business.

As it stands right now, credit card companies have a free reign to charge practically whatever rates they want. They are have no issues with raising rates without notice and without cause, or raising rates due to causes that are completely unrelated to the credit card debt. For instance, some credit card companies raise rates on cardholders who are late paying their electricity bill, or phone bill, or cable bill.

They also have no qualms about charging fees. Some charge a fee for paying the bill over the phone, or charge a fee for paying the bill online, or charge a fee for not using the card enough, or for using the card too much, or for pretty much anything that you can think of.

You might be wondering how it is that an industry that makes millions of dollars in profit a day can all of a sudden need financial assistance from the federal government. The answer is pretty simple. Credit card companies don’t simply take your monthly payment and sit on it. They do exactly what most other Americans do with their money. They invest it. And like millions of other Americans, they made the mistake of putting their money into brokerage firms that got in too deep with the sub-prime mortgage folks.

If the Government actually delivers money that rescues credit card companies from insolvency, they could be in a good position to attach some conditions to that money. They could prohibit them from raising the rates for unrelated causes. They could put a cap on the rates in general. They could put a stop to unreasonable and exorbitant penalty fees. It seems like a simple enough proposition. If they want taxpayer money, they should stop gouging the taxpayers.

This isn’t to say that many Americans haven’t been irresponsible with their credit cards, but the fees and interest rates that go along with credit card debt are simply guarantees of perpetual personal debt, and we think that nobody should have to live like that.

At the Castle Law Office, we have helped thousands of people all over St. Louis get through the bankruptcy process with favorable terms. We help people successfully get through Chapter 7 and Chapter 13 bankruptcy, and we also help our clients successfully handle life after bankruptcy.

If you or a loved one is considering filing for bankruptcy in the St. Louis area, contact the Castle Law Office for a free legal consultation today.

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