Orange County Bankruptcy Lawyer Blog

The U.S. Supreme Court has agreed to consider whether Chase Bank can be sued for changing credit-card interest rates without written notice to account holders who were late in making payments, the Wall Street Journal reported.

The Orange County bankruptcy attorneys at the Shakoori Law Group continue to monitor changes in the credit card industry in the wake of recent federal reform meant to protect consumers against some of the industry's worst practices. Changes, including better notification requirements and a ban on raising rates on existing balances, may help consumers. But the industry is looking for other ways to make up for lost income, including high membership fees and higher initial interest rates on credit cards.

Credit card debt is one of the leading causes of bankruptcy in California and throughout the nation. Consumers facing high levels of credit card debt should consult a Riverside bankruptcy lawyer for a confidential appointment to discuss their rights. An interest rate hike -- frequently to 20 percent or higher -- can quickly overwhelm a struggling family and lead to thousands of dollars in additional interest and unaffordable monthly payments.

In this case, the bank, which is a unit of J.P. Morgan Chase & Co., is asking the court to overturn a lower court decision in California that revived a class-action lawsuit against the company. Chase argues that federal law at the time did not require it to give notice of rate changes to cardholders who were late on payments. The bank claims the initial contracts given to cardholders already contained provisions allowing increased interest rates for borrowers in default.

The Federal Reserve Board amended that law last year as part of a comprehensive overhaul of credit card practices. Banks are now required to give advanced notice of rate increases, even if the default rate was already specified in the initial contract language.