Each time a merchant swipes your credit card the credit card company charges the seller a percentage of the sale, usually 1-3%. Every time you, the consumer, use your credit card (and don’t pay the monthly balance off in full) you also pay the credit card a percentage, and not just a few percentage points. Finance charges on major credit cards have no legal ceiling, with some cards charging 25% or more (!) for those with poor credit ratings.

Merchants across the country and the card industry are vying for public support on the issue. Many merchants feel that the credit card fees are unwarranted and eat into their ever-dwindling profit margins, compelling them to pass the cost to consumers. The card issuers say they are providing a vital service to merchants as increasing numbers of Americans choose plastic to pay for their purchases.

Large national chains such as 7-Eleven have embarked on petition drives, using newspaper ads and even YouTube videos to prove their points. Merchants in many European countries, Canada and New Zealand pay somewhat lower interchange fees than their American counterparts and that if U.S. merchants paid comparable fees the net savings would total $125 billion. According to a senior vice president with the Alexandria-based National Association of Convenience Stores, in a Washington Post article, “as more… people are using plastic for payment, it's getting increasingly problematic for our industry."

Congress is presently considering bills that would regulate these merchant interchange fees, which totaled $48 billion in 2008. The Government Accountability Office is also currently studying these fees as required by a law signed by President Barack Obama that bans unfair credit card industry practices. One bill would allow merchants to enter into collective bargaining agreements with banks when setting fees, which many say they currently cannot do. Another proposed bill would make it easier for merchants to steer customers to other forms of payments and let them set minimum and maximum amounts for credit card purchases.

Contrary to many merchants’ statements, the credit card companies state that retailers can negotiate their rates but that the vast majority does not want to bother and accepts the default nonnegotiable figures. Most merchants agree that credit cards offer valuable services such as providing almost instant payment on purchases and providing protection from consumer fraud. Many feel, however, that the charges are too high and that they have to either “eat the cost” or pass the cost onto an already fragile customer base.

What to do??? As the consumer, YOU have the final say as to what you are willing to pay for an item as well as how you will pay. Credit cards are often a major contributing factor to personal bankruptcy, especially when cards are charging upwards of 25% on unpaid monthly balances. Consider, instead, joining a credit union and using a debit card or cash (gasp) when making your everyday purchases. Keep a credit card for emergencies or large ticket purchases when using cash just isn’t practical. Offer your friendly local merchant or even large national retailer cash in exchange for a 1-2% lower price—it would be mutually beneficial and might just work!

If you have questions concerning filing for  Chapter 7 or 13 bankruptcy protection in the United States, call the pros at Legal Helpers; 1-800-260-1402, toll-free.

There’s a terrible myth that filing bankruptcy can have negative impact on your job. Is there any truth to these myths? Can you lose your job for simply participating in a bankruptcy as a solution for your financial troubles?

Luckily, there is very little truth to these myths. 11 U.S.C. §525(b) provides:

“No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt –

(1)  is or has been a debtor under this title or a debtor or bankruptcy under the Bankruptcy Act;

(2)  has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of discharge; or

(3)   has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.”

This is good news for many financially stuck individuals who are considering bankruptcy as a solution to their financial difficulties. The idea of being fired while attempting to recover from near financial ruin is quite terrifying, but you can rest assured that filing a personal bankruptcy will never be the cause of such a situation.

Denver’s Frontier Airlines Encroach Upon a New One

The business of Frontier Airlines has increased 20 fold since this month last 2008. To what can Denver’s own Frontier Airlines owe their mammoth turnaround?  April of 2008, Frontier filed for Chapter 11 bankruptcy protection.  They’ve found a benevolent new ownership and direction following a well-publicized bankruptcy auction: Southwest Airlines lost a bid at Frontier’s bankruptcy auction to Republic Airlines.  Partially thanks to the new ownership, Frontier is ready to emerge from their long bankruptcy next month.

Business critics are throwing verbal daggers at both Southwest and Frontier for both losing and acquiring the company, respectively.  Southwest was criticized for participating in the bankruptcy auction too late in the game, having lost to airline impulse buyers Republic who have well-honed game plans for bankruptcy auctions.  Republic Airlines have been on somewhat of a bankruptcy auction acquisition spree, risky for a being a small commuter parent company.  While commuter parents like Republic Airlines usually run in association with big airlines like American and Midwest Airlines, those big airlines have received fewer contract gigs and subsequent smaller slices of their profit pie. 

Sure, the profits look good: but the state of Denver’s officials are concerned that old Frontier Airlines employees will be sideswiped in the passing of the Frontier hands.  $1 billion in debt doesn’t just fly away into the horizon and Republic Airlines bought Frontier at a $113.6 million dollar price tag, also funneling tens of millions of dollars into the billion dollar debt: judging by the sea change in Frontier’s profits post-bankruptcy, the recent acquisition is expected to prolong Frontier’s post-bankruptcy winning streak.  Denver officials are aware that cutting long-held staff would be a quick way to cover the rest of Frontier’s leftover Chapter 11 bankruptcy debts.

Businesses filing for Chapter 11 can bounce back. The reorganization may not be seamless with many detractors offering an unsolicited opinion, but with a sky high debt like Frontier’s $1 billion in arrears, it’s probably the best option.  Call a member of our bankruptcy-focused legal team to find out how bankruptcy can truly help you cut your losses: call us at 1-800-260-1402 today!