Payday Loans Are A Bad Deal

Payday loans are coming to the attention of federal regulators; the feds are moving to curb and do away with high-interest, short-term lending, which is designed to draw people into a cycle of debt. After a lengthy study on repeat usage of payday loans created by storefront lenders, the Consumer Financial Protection Bureau said it is considering imposing waiting times between loans.Some new guidelines have already been issued, by the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency; these are similar to rules set a decade ago to rid people of another kind of payday lending. The director of the CFPB, Richard Cordray, reports his agency’s research found that the storefront lending industry’s longstanding argument—that their loans help people occasionally strapped for cash—are not true: “Payday and deposit-advance loans, while designed for short-term emergency use, are leading many consumers into long- term, expensive burdens.”Restricting payday lending has a been a goal of consumer rights’ groups (who also fought for the inception of the CFPB). Payday loans are created by storefront lenders, and secured with a check that’s post-dated to the borrower’s next payday. A borrower’s credit is usually not taken into account—anyone can take out a payday loan, which have to be repaid in full with a giant balloon payment covering interest (usually a two-week term).Banks have started offering similarly bad deal loans, often called deposit-advance products; these take repayment directly from a checking account. The CFPB’s censure of short-term loans applies equally these bank versions: “What we found is there is not much difference, from the consumer’s perspective, between payday loans and deposit advance loans,” Cordray said in a conference call with reporters. “They have similar purposes and, it turns out, similar usage by consumers.”Despite the lending industry’s hollow remarks about considering what alternatives people with bad credit have, greater regulation is coming. People end up taking out additional loans to cover the first usurious payday loan, which drag them deeper into debt. The CFPB has said annual interest rates on payday loans can hit 521 percent. Overdue loans are soon turned over to collection agencies.If a collection agency has harassed you, you may be entitled to money damages up to $1,000.00, based on the FDCPA, which has been around for almost 35 years. The FDCPA is a federal law that applies to every state. In other words, everyone is protected by the FDCPA. The FDCPA is essentially a laundry list of what debt collectors can and cannot do while collecting a debt, as well as things debt collectors must do while collecting a debt. Plus, the FDCPA has a fee-shift provision. This means, the collection agency pays your attorney’s fees and costs. Founding attorney, Michael Agruss, has settled over 1,500 debt collection harassment cases. We want to help you, too.