WASHINGTON — Republicans and the banking industry are railing against legislation being pushed by key Democratic lawmakers that would block credit card companies charging high interest rates from collecting from consumers in bankruptcy proceedings.
The proposal would change bankruptcy laws to dissolve claims for repayment of debt carrying interest over a certain level, now 18.5 percent. It could affect millions of dollars in claims made by creditors from consumers who have filed for bankruptcy protection.
Such a change in bankruptcy requirements would prompt lenders to restrict credit in an already tight market or raise interest rates and fees, the American Bankers Association warned lawmakers.
The bill is sponsored by Sen. Sheldon Whitehouse, D-R.I.
