Many small businesses rely on credit cards to get by. But while the CARD Act of 2009 helped protect consumers from unfair lending practices, the Act does not cover business credit cards. This can spell trouble for small business owners who find themselves facing financial challenges and struggling to pay the minimum payments on card balances.
The NFIB Business Edition MasterCard issued by First National Bank of Omaha, for example, seems to be exploiting the Act's loophole. According to Businessweek, the card's terms state interest rates can be raised whenever the bank sees fit and by however much the bank wants to raise it. Those who do not make these payments can be slapped with a 30 percent penalty APR. Also, if a cardholder has two different APRs, he or she cannot pay down the higher-rate balance until all of the lower-rate balance is paid off. This can increase debt, lengthen repayment, and lead to serious financial problems for small business owners.
These terms serve as an example of how credit card debt can become a spiral of financial death that seems impossible to escape. But, when all looks bleak, an attorney can throw a struggling small business owner a lifesaver.
An experienced debt relief attorney can discuss all the options available to an individual or a business struggling with credit card debt. One option, and the one taken by many, is to file for bankruptcy. There are many types of bankruptcy. Some forms completely eliminate debt while others restructure payments to make them more manageable. Depending on the type of bankruptcy sought, the individual or business owner may be able to keep his house and/or his business.
Getting out from under credit card debt can be complex and extremely difficult. So, too, can filing for bankruptcy. But an attorney can paint a clear picture by laying the facts bare and applying the law so the individual can make fully informed decisions. When all seems hopeless, an experienced attorney can represent the individual in bankruptcy court to help ensure his best interests are protected and he can reach a new financial start.
Source: Time, "Small Business Credit Cards May Lack Consumer Protections," Martha C. White, Oct. 14, 2013