A Crackdown on the Payday Loans That Lead to Bankruptcy
Posted on Jun 03, 2013
Payday loans are short-term advances of money, with high interest rates. Federal regulators have begun to crack down on these loans when they're issued by big banks.
A bank sometimes offers short-term loans with interest rates as high as 300% to customers who have a checking account there. The bank typically won't even check to see if the person is capable of paying back the loan. Then, when the person can't pay back the loan on time, the bank will siphon money out of their account.
As a result, many consumers are overwhelmed with debt after taking out these loans. They may spend years or even decades paying back the bank!
Regulators see this practice - also known as Checking Account Advance or Deposit Advance Loans by some banks - as predatory lending, which hurts consumers and can ultimately lead to bankruptcy.
Payday loans hit senior citizens especially hard, since the government often directly deposits Social Security and disability payments into the person's account. Before the account holder has a chance to protect the funds, the bank has taken out the money to pay back the loan and its interest.
Many people who come to see our bankruptcy lawyers in Kansas City have had trouble with payday loans. Maybe you're in that situation. If so, give us a call. We can help you sort out your financial worries and get you back on the right track.
Our Kansas City bankruptcy lawyers are here to help anyone struggling with payday loans. Contact us today to speak for free about your situation.