I have had a number of prospective bankruptcy filers come in recently, that have a lot of credit card debt. Some only $20,000 or $30,000; a few as high as $60,000 or $100,000. One fellow had $160,000! They have had the credit card debt for a long time, and have been able to manage it up until now.

They tell me that the credit card banks are raising the interest rates, seemingly for little or no reason. And we're not talking about raising the interest rates just a few points. They have their rates raised from a modest 8-10% to the default interest rate of 29.9%.

The rates are raised so much, that making payments really doesn't do any good; very little if any of each payment goes to the principal of the loan; it almost all goes to interest. I don't know, but I suspect, that this recent activity is related to the new restrictions on the ability of credit card banks to raise interest rates, without so many days' prior notice.

These regulations are not yet fully in effect, so I believe that this recent activity is designed to take advantage of the situation, and raise bank customer's interest rates, before the banks become restricted and can no longer do so, at least without giving considerable notice.

How do you avoid getting ripped off by these sky-high interest rates? Obviously, pay off your balances if you can. If you can't, a bankruptcy filing can, if you qualify, eliminate the debt through Chapter 7, or stop the interest and let you pay part or all of the principal of the debt through Chapter 13. But if you've had your interest rates raised recently, you know how scary it is getting- and it's time to do somthing.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization
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