The Consumer Finanacial Protection Bureau is taking aim at companies that offer high interest payday loans. New rules have been proposed to protect borrowers of these loans from an endless cycle of debt.
Often times borrowers of payday loans are already living pay check to pay check and are using the loans to cover basic living expenses like rent and utility bills. Because of high interest rates, consumers end up having to borrow more and more to keep up, resulting in insurmountable debt.
The new rules would require that lenders make sure that borrowers can afford to pay off the loan while meeting other necessary financial obligations. They would go further by requiring that companies end the reissuance of loans and regulate penalty fees by requiring lenders to notify borrowers of debits to their accounts in advance to avoid overdraft charges.
If you are struggling with a difficult financial situation, bankruptcy protection may be an option. Contact the Law Offices of Charles E. Covey to explore a financial strategy that may work for you and your family.
Source: New York Times, “Payday Loans’ Debt Spiral to Be Curtailed”, by Stacey Cowley, June 2, 2016.