Why aren't payday loans illegal? They appear to be legal in Texas (gasp).

[Ilsa]

My brother got screwed up with his. And of course, if you mess it up with the checks, you are guilty of bouncing checks and the DA could come after you. My brother said the interest rate appears to be about 500%.

[dsc]

1. they can't prosecute you for the checks

they can, and will sue though.

[Tangerine LaBamba]

5. Bouncing a check

is a Federal offense. Yeah, the Feds can prosecute you. And you could end up doing time for it.

Seriously................

[dsc]

22. they aren't really bounced checks since they were post dated

[Tangerine LaBamba]

37. Sorry,

but that "post-dated" myth is just that - a myth. The banks are under no legal obligation to honor the date on a check............

[tammywammy]

17. Yes, they can

The Dallas County DA's office is currently going after a few people for the business I work for for bounced checks, including one that will also include the charge of theft of service.

http://www.dallasda.com/check-division.html

[dsc]

21. These aren't really bounced checks since they were post dated

my sister used to work for a cash advance place so I know how it works.

[flvegan]

58. Untrue.

At least in Florida. If you write a check, and the date it's presented for goods/services it can be shown that the money was NOT in the account, the check writer is on the hook for a possible felony.

[suninvited]

69. Must be different in different areas

in Escambia county, Florida the DA's office will not prosecute any post dated checks. At least thats how it was up until 2001, when I got out of retail.

[Ilsa]

42. Thanks, Tammywammy. My brother is in Dallas County.

He's had enough problems without having to deal with the DA.

[donco6]

2. They're all over the place here in Colo.

Opportunistic fuckers.

[Maru Kitteh]

13. In Nebraska I saw one in a strip mall with a Head Start center and a SAFE center.

I wanted to go right in there and punch them in the face.

[donco6]

29. My school district is high-poverty.

I swear there is one on every single corner.

[Ilsa]

41. "SAFE"? What is that?

And yeah, I feel like doing the same thing. They are the worst loan sharks. I hate them. And the hot checks create a debtors' prison situation.

[Maru Kitteh]

72. SAFE centers are for victims of domestic abuse.

Flipping vultures.

[Horse with no Name]

3. In Texas it is illegal for anyone to accept a postdated check

I don't know how they skirt that one either.

[Tangerine LaBamba]

8. Post-dated checks are meaningless -

you can cash them immediately. It's a myth that has just lingered, but there you go. Individual banks may honor a post-dated check, if you request it, but, by the same token, they may ignore your request.

[TahitiNut]

24. Social Security and pension checks often arrive before their date ...

... and my ('our' actually) bank has refused to cash them even 1 day before the date on them. (I find that quite annoying.)

[Tangerine LaBamba]

38. It's all up to the bank -

a matter of policy - that's your bank's choice. But, the rules of commercial paper make it very clear that it is not legally mandated. In short, the date on a check - provided it's not from a long time ago, too long ago to be a valid piece of paper - doesn't mean anything legally........................

[madamesilverspurs]

9. When I was taking courses for a paralegal certificate

the instructor explained that "there's federal law, state law, local/municipal law, and Texas."

[Statistical]

28. Because it isn't

Please cite the statute that makes accepting a post dated check illegal.
As other have posted often govt, unemployment, and SS checks arrive before their date.

Are tends of millions of Americans committing fraud everyday?

[Horse with no Name]

54. Yes, it is

that we were told by the District Attorney in our town (I assume he knows the laws) that writing post-dated checks is against the law. This obviously only applies to personal checks, the other checks you cite are paid on certain dates and therefore would not be considered postdated.

http://www.co.wood.tx.us/ips/export/sites/wood/downloads/hccomp.pdf

[Statistical]

57. Reading Comprehension Fail

Per the document you provided.
The District Attorney’s office cannot legally prosecute checks taken outside of Wood County, checks
taken as payment for debt, or post-dated checks.

Strange the DA admits to not being able to legally prosecute something you claim is illegal. :)

Also in tips for merchants

CHECKS TO AVOID:
The following checks usually cannot be prosecuted as “hot” checks:
...
A post-dated check;

[Horse with no Name]

61. Feel better?

Good. Glad I could help. :eyes::hi:

[madamesilverspurs]

4. Partners in the "poverty industry":

payday loan shops, rent-to-own stores, pawn shops. The worse an economy gets, neighborhood or national, those increase. They sometimes refer to themselves as 'alternative banking.' Pawn brokers have been around forever; but today some of them are owned by huge multi-national corporations that have no resemblance to the neighborhood businesses who knew their neighbors. The payday loan stores and rent-to-owns are newer phenomena that are unabashedly predatory; they have a vested interest in ailing economies, as they'd go out of business otherwise. Interesting history on both, regulation-wise.

[napoleon_in_rags]

16. Them and the credit companies.

I heard the other day that people are getting blocked from jobs for credit report. So if people don't have enough money to pay debts, they are blocked from creating products or services for society. The net effect of that will massive economic damage.

[napi21]

6. I don't know about legal, but there's a lot of them in Ga, too.

I think they came into being when the max interest rate was either ignored or done away with. It used to be the max anyone could charge was 22%, and lots of cc's charged that! Now there appears to be no limit!

[Tangerine LaBamba]

10. Usury laws were closed down

while Phil Gramm and his cronies were busy deregulating the banking industry.

We need to reinstate them as quickly as possible.

Here in Virginia, the legislature recently capped the interest these places can charge. But, still, they're parasites...............

[MadMaddie]

7. They are legal in Wa state too....

One of their favorite locations is near poorer neighborhoods and military basis....

[tabbycat31]

11. they're illegal in NJ

[Maru Kitteh]

14. Happy belated birthday to your kitty :-)

I love your little timeline.

[tabbycat31]

39. thanks

it's from www.pitapata.com

[Raejeanowl]

12. How About Car Title Loans?

And furniture rental companies. Lease-to-own computers. There go another couple of partners in the opportunistic fleecing of the working class.

[Ilsa]

43. Yeah, I hear you! My bro doesn't have a car with a title to hock, so

that isn't an issue.

Honestly, he's in so far over his head that I don't know how he sleeps at night. We'd be fine with him running away from it all and starting over, but he has a severe chronic medical condition, so he can't afford to lose his insurance.

[Common Sense Party]

51. Can the family help out?

[Ilsa]

52. Yeah, we already are. I took care of it yesterday for my father

after getting his permission. I loaned him money several months ago that was supposed to be repaid with his income tax refund.

My brother has old issues regarding drug abuse that are affecting everyone's attitude also. We have considered letting him hit bottom financially, but that would mean he'd lose his job and health insurance. Without medical care, his diabetes will kill him faster than exposure from being homeless.

It's a long story. I wonder if it would be accurately summarized as follows:
Gay child grows up in small town in Texas with our fundie (but not vicious) family. Smart kid gets good degree, makes just enough money to have some fun and get caught several times, got bailed out by parents. Digs himself into financial hole. May not be fully rehabbed, but I don't care except that it seems to be causing him pain. He doesn't remember that pain when he is jonesying for weed.

[imdjh]

15. Crusaders want to close down head shops, but AMscot is open all night?

Like Chris Rock said,

" And here's something, man. Drugs are illegal, but ATM machines are open twenty-four hours a day. Twenty-four hours a day. For who? Who the fuck is it open for? Have you ever taken out three hundred dollars at four o'clock in the morning for something positive? Shit, when you press that machine at four o'clock in the morning, I think a psychiatrist should pop up on the screen and go, "Come on, man, save your money, man. Don't buy drugs, buy some rims. They spinning, nigga, they spinning, they spinning, nigga, they spinning." Americans worship money. Shit, you know why banks are closed on Sunday? 'Cause if they wasn't, church would be empty."

[tammywammy]

18. No, they're not illegal in Texas

Here's an interesting article on them http://www.texasobserver.org/article.php?aid=3032

[Selatius]

19. Just tell your friends and family to avoid those places.

You're better off borrowing from a friend or family member anyway. They give better terms.

[EFerrari]

20. They have a huge lobby in DC and court people like Chris Dodd, that's why. n/t

[LooseWilly]

23. Are you only talking about the issue of payday loans, or the check cashing centers that offer them?

Just wondering... because I drove a cab for years... but it was hard to tell who was getting a payday loan, and who was cashing a check... and there were lots of hints as to why... but I'm not looking to spew anecdotal info you're not interested to hear.

[WeDidIt]

25. Interest Rate is closer to 800% n/t

[MercutioATC]

26. If your brother "got screwed", he violated the terms of the contract.

His interest rate is whatever it says on the contract. It's right there on paper...the paper he signed when he agreed to the term of the contract.

[EFerrari]

30. Those people make 90% of their profits from people who do the same thing. n/t

[MercutioATC]

32. And how is that the fault of the businesses?

There IS no reasonable "annual rate" you can charge for a 2-week loan...and however one chooses to spin it, there ARE 2-week loans.

Let's assume that they charged a "reasonable" 30% APR...that would earn them about $4 in interest on $400 two-week loan. Do you know of any business that could write a loan for $4?

If people honor the agreements they sign, payday loans are a reasonable way for those with poor or no credit to get money on a short-term emergency basis. To actually pay "500% interest", one would have to violate the terms of the agreement TWENTY-SIX TIMES IN A ROW.

[EFerrari]

33. That's the line they feed you. You have it down perfectly.

In reality, if most of their customers have to keep refinancing a loan they can't pay, that's usury and it's a business plan not a mistake.

[MercutioATC]

35. How is it "a line"? It's absolutely true.

Refute ONE thing I posted.

The anti-payday loan people like to throw around the "300%! 500%! 800%!" numbers. What they fail to say is that a person would have to default on the contract 26 times in a row to pay that effective interest rate ("effective", because those aren't even the rates, they're a combination of interest and late fees).

THAT'S a "line".

[EFerrari]

36. Yes, it's a line. Because when 90% of your clients "default"

it's a business practice you're talking about. And it's not a default, it's usually a refi.

But nice work, trying to put it on the people these vampires bleed dry. You should go work for them if you don't already.

[MercutioATC]

49. Ok, what's your solution for people with no credit who need emergency money?

As for the default/refi issue, the borrower only refinances to keep themselves from going into default. Just as with the initial contract, they're free to not sign it.

These people are not victims...at least not of the lending companies.

[ecstatic]

56. Exactly. If you don't like the terms,

DO NOT BORROW! It's really that simple. :crazy:

[EFerrari]

68. From your own argument, people with no credit don't set the terms. n/t

[MercutioATC]

73. Correct, but they have the choice whether or not to agree to those terms.

[backscatter712]

59. The contract is engineered to force a delinquency.

If you're on the ropes enough to get a payday loan, chances are that you'll be stretched to your limits to repay in full, which means that the loan gets rolled-over, and rolled-over, and rolled-over, because you can't afford to pay it off.

And then eventually, something will happen. You'll lose your job, or you'll have some sort of emergency, and you will have to choose between paying for rent and food, and paying the payday loan.

And that's when the penalties kick in, and the collectors kick in, and they try to tear you to pieces. They'll sue, they'll try to take your car, or garnish your paycheck, or put a lien on your house. That's where the real money from payday loans comes from...

If you ask me, every single payday loan business should be firebombed. Where's the fucking napalm?

[Posteritatis]

60. Yep

Some around here, on top of the hideous interest rates, would have so many regular, arbitrary fees that they effectively resulted in four or five-digit interest rates. That got shut down quickly, but the surviving ones are still pretty bad.

[MercutioATC]

63. What interest rate would you consider reasonable?

[Posteritatis]

64. No idea, but hundreds, thousands or tens of thousands of percent is on the bad side (nt)

[MercutioATC]

66. Ok, would you consider 50% to be excessive?

[MercutioATC]

62. That's like saying that casinos are "engineered" to bankrupt people.

Are there people who gamble themselves into bankruptcy? Sure.

Do casinos actively market themselves...even to people for whom gambling is a financially unsound idea? You bet.


...but it is an individual's responsibility to decide whether or not to gamble.


Do you advocate firebombing all casinos, too?

[WolverineDG]

27. They were legal elsewhere before they were made legal in Texas

(gasp) Where do you think they got the idea from?

Until about 10 years ago, there was no such thing as a "payday loan" lender in Texas. Many of us fought hard against them, as we fought against home equity loans. But since all the other states (including the High Holy Blue States) had them, we just had to have them too. :eyes:

dg

[twitomy]

31. Legalized loansharking IMHO....

All they are missing is the goons with basesball bats...There should be a law against usury...

[Xenotime]

34. They are very legal

[Vidar]

40. It's usury (exceesive interest) that needs to be illegal once again.

[Common Sense Party]

44. They're legal most everywhere. And you have to be stupid to use them.

But that's the business model. They get stupid or desperate people, and they ream them.

Many of the payday places are actually owned by the big banks.

[Ilsa]

45. He was desperate and needed money or face eviction. He knows it was

stupid, and he isn't a stupid person. He's one of the smartest people with numbers that I've ever known. But he was stupid in doing some other things, and got desperate. He didn't want to approach his family for money.

[Common Sense Party]

47. I've known many people who were "smart with numbers" but short on

common sense. Look at how many bankers, mortgage lenders, realtors, stockbrokers, insurance agents, etc. are in bankruptcy or losing their homes simply due to overextending themselves. Look at Wall St. banks who overleveraged assets 30 to 1.

Family is the first place you go in that situation, not some legalized loan shark.

[MercutioATC]

50. I'm not trying to beat him up, but HE was the one who got into trouble

and HE was the one who agreed to the terms of the payday loan.

I'm not seeing the argument for making payday loan services illegal.

[Ilsa]

53. I know he's a screw-up. The problem is that the interest is

outrageous and creates an opportunity for imprisonment. A "debtors' prison" could arise for people who resort to these services for emergency funds. If I default on a credit card, it isn't likely I'll be arrested.

[MercutioATC]

67. The actual interest paid is reasonable.

Consider:

1) Most people taking out these loans are terrible credit risks

2) The "500% interest" is actually a combination of interest and fees, and you only get to 500% by breaking the terms of the original contract 26 times in a row.

3) "500% interest" as an APR equates to about 19% interest over the span of the 2-week loan (and that includes fees).

[Freddie Stubbs]

46. Why? Because if they weren't, people would go to loan sharks

[dkf]

48. One thing I've learned is that brothers are very resourceful in figuring

out how to eek out every penny they can NOW.

And they will make decisions that drive you nuts, no matter how hard you try.

If its not one thing its another.

[ecstatic]

55. And where would your brother have gotten the money

were it not for the payday loan? I'm not defending it (I've never used one and hope I never have to), but a responsible person should have a means to getting desperately needed money. The key is to read the fine print.

[inwiththenew]

65. What other option do people have?

I mean you could go to family if you have it, but if you don't have the credit your options are limited. Over drafting you bank account would probably be worse than these loans.

[TheMightyFavog]

70. 500%?

Even the mafia doesn't charge that kind of interest.

[Eric J in MN]

71. Excessive interest is the problem. Not payday loans per se.

If a company provides a loan until payday at reasonable interest, that is OK.

[MercutioATC]

74. What rate would be "reasonable"

Keep in mind, these are unsecured loans made to people with little or poor credit histories.

[Vinca]

75. New Hampshire lowered what they can charge and they left the state.

They're criminals.