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In one of our recent blog posts, we wrote about how payday loans use ultra-high interest rates to trap borrowers in a cycle of debt. Fortunately, we have an update and good news on the situation.
Two weeks ago, there were some major changes to how payday lenders could operate in the state of Missouri. The Missouri Attorney General shut down several companies issuing online payday loans from other states and ordered them to pay restitution to victims.
Missouri Attorney General Chris Koster announced that an agreement had been reached with a payday loan company running eight separate online operations. The agreement forced the company to shut down all operations and provide $270,000 in restitution to borrowers for charging them excess fees. In addition to shutting down operations, all existing loan balances for Missouri borrowers will be erased if they originated from these eight online operations.
According to the Attorney General’s Office, a payday loan company operating from a Native American reservation in South Dakota had been issuing loans in Missouri despite not possessing a license to conduct business in the state. The short-term loans offered extremely high interest rates and forced consumers to have their future wages garnished from paychecks and bank accounts when they could not pay.
The Attorney General’s Office had received over 50 complaints from borrowers charged $25,000 in fees. Further investigation into the complaints revealed as many as 6,300 borrowers might have been subjected to similar fees. In one case, a Missouri woman paid more than $4,000 on a $1,000 loan, with the other $3,000 coming directly from excess fees.
Payday and other predatory loans can put borrowers in a financial downward spiral, making other debt obligations impossible to pay. Consumers stuck in debt can explore the option of filing for a Chapter 13 bankruptcy. Our readers can find out more about Chapter 13 bankruptcy by visiting our website.
The Sader Law Firm – Kansas City and Missouri Attorneys
