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Arkansas credit card debt: Desperation shouldn't drive decisions

When it comes to predatory lending, Arkansas may enjoy something of a reputation of being the place of calm in the eye of the storm. That is, while states all around Arkansas continue to allow payday lending operations to function and charge sometimes exorbitant interest rates for fast cash, Arkansas' constitution has put a lid on such non-bank lending rates, capping them at 17 percent.

The rationale for such a limit is supported by survey results that show that consumers in desperate credit card debt often don't feel they have any other choice. In order to meet the immediate needs, they often are ready to accept any terms and pay any price. In one state, that desperation has allowed the generation of loans that can carry annual percentage rates of up to 700 percent.

While such credit availability may be attractive in the short term, it is typically not an effective means for achieving long-term debt relief. If anything, it tends to prolong the financial problems because once consumers are in the "owing" column with such predatory lenders, it becomes difficult to ever actually repay the loans. The desperation just grows. In some circumstances, the inability to pay creditors may result in a lawsuit demanding repayment.

While fighting back in court might be appealing, bankruptcy is often a more effective means in upholding your rights and protecting your assets. By filing for bankruptcy, creditors can be held at bay while the petition is pursued. Lawsuits are put on hold, and creditors are blocked from garnishing wages. Assets are can be protected from repossession.

To find the form of debt relief best suited to your particular situation, it's best to contact an attorney. 

Source: PSMag.com, "How Payday Lenders Bounce Back When States Crack Down" Paul Kiel, Aug. 15, 2013

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