Payday Loan Lowdown

The grumbling has grown and has now become more than a disturbing noise. Wondering what I’m talking about? Payday loans and the protests against it are now gaining momentum and community dialogue about payday loans is going on in states across the country. This movement has gained such momentum thanks to the untiring efforts of grassroots groups that are encouraging consumers to speak out about their debt problems at various meets organized by them.

Sunflower Community Action, an activist group in Wichita has invited consumers, state legislators, regulatory officials and city leaders to one such meet. To be held on Saturday this meeting will deal with payday lending and car title loans. Representatives of the industry also plan to sit in at the meeting, which will be held at 11 a.m. Saturday at Tabernacle Baptist Church. Kansas.com reports:

Jeff Witherspoon, executive director of Consumer Credit Counseling Service, plans to go to the meeting and said multiple payday loans are becoming common for clients of the nonprofit debt management and financial counseling service, as people use one payday loan to pay off another one.

Read more: Payday loans breed concern

Her name could have been anything — Jane or Jennifer, but her story has a resonance and bears similarity to many other stories that are being repeated across the nation. She is a woman who only wants to do her day job, pay her bills and bring up her family. As the needs of her family increase, so do the expenses and that’s when the problem arises. It’s when you are in such a vulnerable situation, that you see a sign that you feel is your salvation. Only problem is that this sign, which says ‘easy money’, may just lead you into a debt trap from which you may find no escape.

Easy money or fast cash are the synonyms associated with payday loans. Of course, on that one count, the industry is quite truthful. You get the money fast and easy. However, it is only once you’ve taken the loan that your problems actually begin. Most lenders allow you to stretch the loan payback date — and usually, most people require this extended time. The company allows you to extend time for only one purpose though — it can then charge you exorbitant interest rates and you will not know what hit you.

Payday loan stores are all over Kansas and according to recent figures, there’s been a recent growth surge in the industry, which leads to a surge in debt for Kansans. Credit counselors claim to be seeing an increasing number of people forced into debt thanks to this surge in the availabilty of payday loans. 49abcnews.com reports:

Those who work in the payday loan industry said they are most often used by people with legitimate emergencies, like needed medicine for a sick child or necessary car repairs.

Read more: Benefits, consequences associated with payday loans

Live in Kansas and plan to take a payday loan? Then it is important that you know a few facts about payday loans and more importantly about the law before you do so. Kansas.com reports:

Payday lenders can assess only one charge for a returned check. They must stamp "Negotiated as part of a loan made under K.S.A. 16a-2-404. Holder takes subject to claims and defenses of maker. No criminal prosecution" on the back of the check. That means you cannot be prosecuted for bouncing a check to a payday loan company.

Read more: Thinking about a payday loan?

The Navy is busy fighting a different kind of enemy and that too on home turf! Sounds intimidating doesn’t it? Well, that’s how the Navy is reacting to payday loans. According to the commanding offcer of the Naval Base Point Loma: they are going to ‘defeat the predators’. These payday lenders have made a huge dent into the financial stability of military members and their families. These shops, identifiable by their big signs and attractive offers, are sprouting up all over the region outside the gates of Navy and Marine Corps bases.

The problem has now gotten so bad that it can no longer be ignored and needs to be dealt with on a war footing. And that is exactly what the Navy plans to do. One of the ways it can do this is by helping Sailors to become knowledgeable about the financial resources available to them that are designed to help them out. Navycompass.com reports:

"Congress appropriates millions of dollars, and we have millions more in volunteer-donated dollars that are designed to help Sailors in financial need," said Capt. Mark Patton, commanding officer of Naval Base Point Loma. "It’s not just for a guy in trouble; everybody ought to use these resources because they’re designed to help you build a financial plan. Fleet and Family Service Centers, Navy-Marine Corps Relief Society, and several of the patriotic credit unions in the area are there to help Sailors."

Read more: Navy Preying on Predatory Lenders

I’ve written and written on how bad payday loans are and of how the lenders are usurious. If you’ve ever taken a payday loan, you’ll also know how the rates are unbelievably high. Most people who have taken a payday loan seem to be caught in a debt trap and there seems to be no way out of it. And it is really distressing when a person is forced to take another loan to repay the first one. That’s when you know that some drastic measures are required to correct the situation.

And the worst part is that the lender makes things worse by employing unfair means. Like for example, when you take a payday loan, some lenders require you to sign and submit a check, which they cash in case you fail to pay up on time. And if the check bounces, the lender may try to arm-twist you by threatening prosecution. AND, they knew that when you wrote the check, you had insufficient funds in your account! This is NOT allowed in certain states including Indiana.

Now there are many other such seemingly okay rules, which are not actually allowed by the law. In case you feel that your lender has violated the Truth in Lending Act, you can file a complaint with the Federal Trade Commission (FTC). Call their Consumer on toll free: 1-877-FTC-HELP (382-4357): TDD: 202-326-2502. You can also use the FTC’s online complaint form to register your complaint. But be warned, the Commission cannot resolve your individual problem, but it can definitely act against a company if there is a pattern of possible law violations. So, don’t hesitate to file your complaint

A recent from the U.S. Government Accountability Office states that a Fort Drum board whose responsibilities include heading off predatory lending practices didn’t even meet for four years! This fact came to fore when the GAO’s Valerie Melvin testified before the House Financial Services recently about financial issues facing U.S. Service members. Newswatch50.com reports:

She said the Department of Defense established Armed Forces Disciplinary Control Boards which can make recommendations to place businesses off-limits to service members to protect families from unfair business practices.

Read more: GAO: Military Disciplinary Board might have prevented payday loan ripoff

You can probably relate to Elizabeth Lawson’s story. Her troubles began with an $800 electric bill, the result of a malfunctioning water heater. Since she didn’t have the money on her, she went to a payday lending store nearby and borrowed $200. She was hoping to pay it off with her next Social Security check. But before she knew it, Lawson was so deep in debt that she had to borrow from one payday lender to pay off another.

And guess where all this borrowing and juggling leaves Lawson? Close to bankruptcy! Today, revolving-door loans like Lawson’s have become quite common. The nonprofit Center for Responsible Lending estimates more than 90 percent of these small, short-term and high-cost loans go to repeat borrowers.

The payday lending industry seems to have taken utmost advantage of Virginia’s business-friendly climate. Now, opponents of payday lending have begun to raise their voice against this type of loan and are demanding an outright ban. Roanoke.com reports:

Yet of a slew of bills introduced this year to curb predatory lending practices — to prohibit rollover loans, limit the number a person could take out in a year and extend the pay-back time — none made it out of the House of Delegates.

Read more: Payday loan reform is past due

You can probably relate to Elizabeth Lawson’s story. Her troubles began with an $800 electric bill, the result of a malfunctioning water heater. Since she didn’t have the money on her, she went to a payday lending store nearby and borrowed $200. She was hoping to pay it off with her next Social Security check. But before she knew it, Lawson was so deep in debt that she had to borrow from one payday lender to pay off another.

And guess where all this borrowing and juggling leaves Lawson? Close to bankruptcy! Today, revolving-door loans like Lawson’s have become quite common. The nonprofit Center for Responsible Lending estimates more than 90 percent of these small, short-term and high-cost loans go to repeat borrowers. Chron.com reports:

The payday industry says its loans aren’t designed to serve consumers with long-term financial needs. Instead, the lenders say they fill a void in the small, unsecured loan market by extending credit to people in a short-term crunch, perhaps because of a major car repair or medical bill.

Read more: Revolving door: Borrowers keep returning to payday lending stores