Declare a Mayday on Payday Loans
When you are deep in debt, trying to scratch up cash for the rent and the car note, it is a bad time to say the payday loan companies are dangerous to your credit rating. But a bill pending in the Michigan Senate is about to make matters worse for people caught in economic cross-hairs.
Birmingham. MI, April 26, 2016 (Newswire.com) - "Relaxing the provisions on payday loan companies is just plain wrong," says consumer advocacy attorney Dani K. Liblang, of The Liblang Law Firm, PC in Birmingham. She recommends voters write their elected officials to thwart passage of SB 842 and SB 843, now in Banking and Financial Institutions committee.
Michigan has fine laws in place to keep consumers from tumbling deeper in debt beyond the 400 percent annualized interest currently charged by most payday lenders. Much of the protections in place would be nullified under the new provisions.
Provisions to relax loan amounts and increase the frequency of loans at payday lenders are trending around the country so consumers must be vigilant. The burden falls heaviest on the poor and financially overwhelmed. If tied to a car title loan, an individual mired in debt could lose his credit rating and his vehicle, making it harder to resurface.
Payday lenders, according to the Federal Deposit Insurance Corporation's recent report, attract 3 to 5 million American households and payday lenders have more storefronts in the USA than do McDonald's and Starbucks combined. The payday loan companies say they are helping consumers cope with short-term shocks that rise between paychecks. But 19 states have banned the process of rolling over loans that pass the due date. Because it is very bad business. Usury in fact.
The Consumer Financial Protection Bureau, which The Liblang Law Firm endorses, is crafting regulations that limit interest rates and require lenders to consider a borrower’s ability to pay before issuing a loan. Current laws give some protection. Michigan's Attorney General, Bill Schuette, says the state maintains an electronic database that payday lenders must check to see if a customer has any outstanding transactions.
The lender cannot issue more than one outstanding payday loan while another remains on the books. Schuette is clear that the transaction is not intended to meet long-term financial needs and the loan can only be deferred for 31 days.
To be sure, people with easy access to a savings account, some float on their credit cards or a friendly banker, don't deal with payday loans. The poor, who are already beset with high costs and low incomes, are hit squarely. The daily interest is $15 for 14 days, calculated at $1.07 x 365, rises to almost 400 percent.
The Liblang Law Firm can help people assert their rights with payday loan companies. None of us can afford to make this service metastasize like cancer till debt gets so large people lose everything of value.
Please contact Melinda Curtis-Kollins for more information at (248) 722-5408.
Source: Curtis & Associates