According to an article by Liz Weston at MSN, it looks like the new bankruptcy law may not be as profitable for the credit card companies as initially thought. However, I think it’s too early to tell.

The charge-off rate for credit card issuers has increased dramatically following the rush to file before the new law was put in place.

In fact, according to Weston’s article:

“J.P. Morgan Chase & Co., the nation’s largest credit card issuer, said its charge-off volume would rise 44% in the fourth quarter to $2.3 billion from $1.6 billion for the same period a year ago.

Capital One warned its charge-off rate could rise up to 1 percentage point from the year’s previous range of 4.05% to 4.14%.

Discover said it expected the bankruptcy surge to add $250 million to its costs.”

Will these losses continue under the new law or will the bottom lines of the credit card companies fatten as less people file bankruptcy? We have yet to see.

To read the original article go to: http://moneycentral.msn.com/content/Banking/bankruptcyguide/P135860.asp

Leon Rountree III
Consumer Bankruptcy Attorney