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Banks and credit card companies opposing the bill

Wednesday, December 08, 2010

A bill which could restrict the amount that could be recovered from customers who have declared bankruptcy is being severely opposed by credit card companies and banks. The bill aims to shield a major portion of all forms of property of bankrupt customers, especially when credit card companies and lenders sue the consumer in order to recover outstanding debts. This bill will increase the money that the consumer can hang on to including home equity, tools, computers, car values and cell phones. These protected assets and their levels would be adjusted as per the inflation index year after year. These changes would greatly help the small business owners who use credit cards in order to finance their business.

Since the recession, the number of bankruptcy filings has increased by 16% in the Albany district. According to the banks, restricting the amount of money that banks could recover from their losses through unpaid debts outstanding for bankrupt consumers, would raise the rate of lending for all the consumers in general. Banks also feel these changes could make banks become more paranoid thus reducing the ease with which credit card be provided to consumers. This wouldn`t be beneficial at a time when lawmakers are still trying to ensure that there is sufficient credit available for the consumers. The bill could hurt the bottom line for banks, and they believe that the general expectation of the bank is that they should be repaid as much as possible. Most importantly, even those consumers who are planning to seek credit will be affected.