Payday loan debt settlement, will you get one with new laws?
With new developments that are currently happening with payday loan industry, I am obliged to follow up my original Payday loan settlement, how to settle payday loan debt story. Several states are seriously looking at curbing payday loan fees and interest rates, and that can affect you in either way - it may help you achieve payday loan debt settlement somewhat easier or on the contrary, make it much harder as payday loan operators will try to squeeze every cent since the laws, whatever and if enacted, will hardly deal with loans issued before. Like with any debt settlement you must have both sides, a payday loan lender and a consumer be willing to settle. The pending bills do little to encourage any type of settlement on existing payday loan debt. Here is what's going on,
Ohio
House Democrats in effort to reduce fees charged by payday lenders are trying to address those from a different angle. Instead of 10-month old bill that would cap the yearly interest rate on short-term loans at 28%, which only resulted in payday lenders obtaining new lending licenses and charging a variety of new fees, the latest bill would prevent payday lenders from charging fees that in profit terms, essentially amount to the same 390% annual interest rate that is Ohio lenders charge now.
The main idea is stopping payday lenders from charging consumers to cash their own checks. Lenders used to issue cash payments but switched to checks under the new law in an attempt to collect check-cashing fees. Also under the new law, is the provision that would prohibit payday lenders from charging more than one origination fee in a 90-day period and prevent them from acting as brokers or credit counselors. While it sounds good and noble, if you think it will help your payday loan debt settlement on existing loans, I strongly doubt it.
Arizona
Arizona state lawmakers are seriously planning on shutting down the entire payday loan industry there. What will people who are short on cash and have no other ways of getting it do in this dreadful economy is rather interesting. And what will happen to your potential payday loan debt settlement makes me simply curious. You see, a few years ago payday lenders in Arizona were granted a temporary exemption from the state 36% cap on annual interest rate. The exemption expires June 30, and the lenders says that with all the costs involved, such an interest cap is so low, they will simply close their shops. Then again, charging some 400% in annual interest is somewhat excessive to some.
Colorado
Yesterday, Colorado lawmakers amended a bill cracking down on payday loan fees and interest rates. It was approved by the House Judiciary Committee and is headed for debate on the House floor. Still, it will be referred to voters on the November ballot before the law can take effect. What are the changes and do they have anything to do with payday loan debt settlement? The answer for the latter is no. Now to the changes,
- currently payday lenders can charge a finance charge of $20 per $100 on the first $300 loaned and $7.50 per $100 dollars after that until the loan has reached its maximum $500 limit and the average payday loan in 2008 was $391, with an average annual interest rate of 317%
- the new bill originally proposed capping the annual percentage rate on each loan at 36%, later increased to 45%, plus an added provision allowing a loan-origination fee of $10 per $100 lent for the first loan made to a person in any 12-month period
The whole problem with all these legislators, in Colorado or other states is that apparently they never had to run a business. While the percentage numbers look huge and scary, the actual dollar amounts are rather small. If the new bill becomes a law in Colorado it will likely force payday loan lenders to shut the doors and consumers to look elsewhere. Will they find cheaper alternatives? Who knows.
Washington
A new law caps the amount of payday loans and the number that a consumer can take out in a year.
Wisconsin
A serious argument among state legislators is currently going whether to regulate the payday loan industry.
Montana
A consumer advocate group is collecting signatures, asking voters to decide whether to cap interest rates at a level that would simply force payday loans out of state.
Nationwide
Wells Fargo never got involved to subprime and Alt -A home loans deep enough to suffer the losses comparable to those of Citi or Countrywide. But Wells Fargo was one of the first banks that extended lines of credit to many payday loan business in the early days. Now, consumer advocates are demanding regulators to stop WF from offering consumers payday style loans that could potentially lead into long-term debt. U.S. Bank is also advertising short-term loans with high interest rates. Both banks are offering Direct Deposit Advance Service giving customers advances on their paychecks. For a $10 per $100 borrowed, we are talking 10% monthly or 120% plus annually. So think of it, soon, you may be getting in to payday loan type debt settlement discussion with your bank.
Fri Apr 9, 2010 12:04PM | Copyright: www.bad-credit-advisor.com | More in Payday Loan | Comments (0)
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