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Proposed payday lender regulations face opposition

From time to time, a payday loan can serve to get you out of a jam. If you are in a tight spot and have to deal with an emergency or unexpected expense, having access to some quick cash can be very handy. But payday loans only really benefit borrowers who can pay off the debt in a timely manner.

The problems and debts mount when a borrower has to take out a series of loans. Because of the staggering high interests attached to these loans, borrowers often find themselves in a debt trap.

In June, the Consumer Financial Protection Bureau publicly decried the inherent risks presented by payday loans. The CBFB pointed out that nearly 70 percent of those acquiring such loans also take out a second loan. Moreover, one out of every five borrowers takes out 10 or more loans, all of which can accrue fees and interests.

The CFPB subsequently recommended that the payday loan industry should be subjected to stricter standards for determining the ability of potential borrowers to pay off their debts. But the Small Business Administration opposes such measures. The SBA says the kind of regulations the CFPB wants could shutter some of the payday lenders, which in turn could cut off some people's access to credit.

As it stands, no new regulations would be adopted until next year. And the payday lending industry has indicated its intentions to challenge any such regulations.

Payday loans can be a lifeline, but a series of them can be like financial quicksand. And as you sink deeper into debt, it becomes more and more difficult to escape its grip. But a Texas debt relief attorney may be able to help you break free.

Depending on your situation, you may be able to take advantage of the benefits afforded by Chapter 7 or Chapter 13 bankruptcy. By filing for bankruptcy, you can be relieved of debt obligations or have a repayment plan put in place that grants you more reasonable terms for paying off your debts.

Source: CBS News, "Small Business Administration opposes payday lending rules," Kate Gibson, Oct 7, 2016

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