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When lenders sue, quick cash can turn into a lifetime of debt

High-cost loans already come with annual interest rates ranging from about 30 percent to 400 percent or more. In some states, if a suit results in a judgment – the typical outcome – the debt can then continue to accrue at a high interest rate. In Missouri, there are no limits on such rates.... Read more»

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2 comments on this story

1
1770 comments
Dec 16, 2013, 3:10 pm
-0 +0

I stopped reading halfway though, because the story got far too repetitive and convoluted.

I searched on the term “bankruptcy”, and only found one single instance of the word in this whole entire story. Why in the world a story on this topic be this unnecessarily long, and not be researched enough to include more of a mention of bankruptcy is far beyond my comprehension.

“It’s really an indentured servitude,” he said. “I just don’t see how these people can get out from underneath [these debts].”

Well, I do. It is bankruptcy. For an individual, there are two types: Chapter 7 and Chapter 13. If someone is in a situation where they have to visit these legalized loan sharks, they’ll most likely qualify for a Chapter 7. Chapter 7 means that all the debt goes away and will never come back (except for student loans, child support, and a few other things, but not a situation like this).

Bankruptcy doesn’t look stellar on a credit report, sure. But, it looks a hell of a lot better than a mountain of debt that will never be repaid especially considering the person’s income. It also looks better than late payments and defaults. And, unlike most of these debts, bankruptcy will actually end at some point in time.

I married into a bankruptcy practice. I picked up a lot of it. To be fair, until I married in to it I didn’t have a good understanding of how it worked, either. But, now I see that, for someone in this perpetual-debt situation bankruptcy is far and away the better choice. And, more affordable. The attorney’s and filing fees are often much less than the payments on all these debts.

2
1770 comments
Dec 17, 2013, 3:49 pm
-0 +0

I’ll add another thought, even though it is a day later…

These lenders are predatory, I agree. And, the legality of their business practices should be reevaluated. However, ultimately it is up to us to protect ourselves.

As best as I can tell, these predatory lenders aren’t hiding anything. To me it looks as if they’re fully disclosing the terms up front. So, these borrowers are going in with their eyes open. If they know they can’t pay it back, then they shouldn’t be borrowing it in the first place.

But, at the same time, it is stupid for these lenders to loan money to someone who has a very slim chance of paying it back.

These types of idiots, on both sides, are the ones who cause the depression (yeah, I called it that). If everyone would had stayed true to themselves by not making stupid loans, and not accepting loans they could never came back, the economy would have never collapsed. Oh, no, wait a minute…it is all Bush’s fault, right?

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Jason Comely/Flickr

High-cost lenders, like AmeriCash, exploit laws to sue tens of thousands of Americans every year. The result: A $1,000 loan grows to $40,000.

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