Payday advances signThe Wall Street Journal posted today that the “Justice Department is targeting banks that service a broad range of what it considers questionable financial ventures, including on-line payday lenders” WSJ.

Payday loans are short term loans at high interest rates. These types of loans are legal in Ohio. In Delaware Ohio they are very noticeable. All you have to do is drive down South Sandusky Street in the City of Delaware and you will find 2 or 3 locations within about a half a mile.

According to the article, a spokesman for the Online Lenders Alliance said that the Justice Department’s actions “would cut off an important credit choice for millions of underserved consumers”. I personally have a problem with that statement. These “underserved consumers” do have few credit choices, and when they chose to borrow from a payday lender or cash advance company, they become trapped in a viscous cycle that they cannot escape.

Payday Loans are Legal in Ohio

As an Ohio Bankruptcy Attorney, where payday loans are permitted, I see many clients who have borrowed from these institutions. The stories are not pretty. Every pay period they have a couple of options: 1) pay the loan plus fees in full; 2) pay the fees and borrow again, causing the balance to grow larger; 3) don’t pay and risk the payday lender trying to cash their check, causing overdraft fees and further financial damage.

Payday Loan Collections

Collections start when a payday loan prisoner does not make good on the loan. Granted, we have become a little more civilized in the last 50 years and you should not have to worry about some goon breaking your kneecaps, but the collection tactics are still deceptive and unsavory. The collectors for these companies try their best to intimidate the borrower into paying the money. Many times they announce themselves as Investigator Smith or Investigator Hughes or Investigator (fill in the blank). They call friends and family about the debt. They call you and threaten to have you arrested the next day if you don’t pay, and you may be arrested at work. They truly scare many people. They are ruthless. They have a job to do and that is collect money, period. They don’t care about you.

Payday Loan Collection Protection

The good news is that these collection practices are illegal. If you have payday loans and have been called by an Investigator or someone else trying to scare you into paying the money, seek legal help. You have rights and you have protections. Filing a complaint against the collector for unfair and deceptive collection practices might be an option. Just hiring an attorney to make a few calls might be all you need. You still owe the debt but you don’t have to be abused. Filing bankruptcy can make the debt disappear for good.

Payday Loan Industry Growing

Online payday lending grew 10% in 2012 and accounts for nearly 40% of all payday lending, according to the WSJ article. Our economy has not fully recovered and people are still getting further into debt. Payday loans are not helping consumers, they are trapping more and more in a downward debt spiral.

photo by: HelenCobain


Do you need legal guidance regarding your financial challenges? Would you like to know more about bankruptcy and other options? New Directions Career Center, a non-profit organization serving Central Ohio for more than 30 years, invites you to hear Attorney James Jeffery Jackson, a legal expert who specializes in assisting clients address debt issues. This one hour workshop entitled, Bankruptcy: Putting Your Financial World Back Together Again, is designed to educate participants on legal options regarding financial difficulties – and how to recover from bankruptcy. It will be held on Wednesday, June 26th, from 3:15pm – 4:45pm. Made possible by our generous sponsors, the workshop will be held at 199 E. Rich Street. A suggested $10.00 registration fee is payable at the door; however, the Center assists individuals regardless of their ability to pay. For more information, call 849-0028, extension “100”.

Image Credit: Ken Teegardin www.SeniorLiving.Org



Tired of Harassing Collection Calls

Harassing collection calls place a tremendous amount of stress on you and your family.  How the collections are handled vary greatly depending on who is collecting.  On one end you have the original creditor trying to collect and on the opposite end you have the third party collectors or debt buyers.  And likewise the collection methods change depending on who is collecting.

Most original creditors have some decency and professionally conduct their collection activities.  They will send you letters notifying you that your payments are late.  They may call you later to see if any kind of arrangements can be made.  If the account has been delinquent for some time, they usually send you a final notice that your account is being turned over to collections and that they may take legal action.

Collection companies who work for the original creditors are also generally professional.  They will typically send a letter notifying you that your account has been turned over to them for collections.  The letter will generally inform you that the account is overdue and inform you of the amount due and the methods to pay the account.  If this is unsuccessful they will generally send out additional letters and possibly contact you by phone to try and arrange payment.  They may even offer to settle the account for less than full value.  And if no payments are made, they or the original creditor may initiate legal action.

Many times the debt obligation is sold to third party collectors either before or after legal action.  When this happens, prepare yourself for harassing collection calls.  At this point, the professional conduct of the collection company can vary significantly.  Some third party debt buyers and their collection companies are very professional and follow the same type of conduct describe above, yes they may sue you but they generally don’t cause your phone to ring nonstop.  On the other hand, there are collection companies that are relentless and ruthless.  Harassing collection calls are used to try to scare and coerce you into paying them something.  They will call repeatedly.  The will tag team you with an investigator and a collection agent.  They will call your work.  They will call your relatives.  They will threaten to serve you with a summons and that the sheriff is on his way if you don’t agree to pay them now.  And believe it or not, some have threatened that they will sue you for fraud and that you are going to go to jail.

How do you stop harassing collection calls?  You have a couple options.  First of all you can pay the account.  Secondly, if it is a third party collector whose conduct is abusive, you can hire an attorney and bring a lawsuit against them for violation of the Fair Debt Collection Practices Act, but this will likely cost you more money and take many months to resolve.  And thirdly, you can file bankruptcy, which gives you Federal Court protection under the Bankruptcy Code.

If you are receiving abusive, relentless harassing collection calls, please call me to find out if bankruptcy is an option for you.

Will Filing Bankruptcy Affect Your Credit Score?

Will filing bankruptcy affect your credit score?  Yes, but chances are that your credit score is already declining or will be shortly if you are considering filing bankruptcy.  Every missed payment decreases your credit score.  Enlisting in a debt settlement or debt management program has a negative impact on your credit score.  And yes filing bankruptcy will have a negative impact on your credit score.

Will filing bankruptcy affect your credit score forever?  That all depends on what you do following bankruptcy.  Your credit worthiness, which is what your credit score is supposed to reflect, will improve to some degree because you will have discharged a significant amount of debt.  Your debt to income ratio will improve after filing bankruptcy.  Your actions following bankruptcy will determine how soon your credit score recovers.

Keep in mind that it is primarily the creditors that you obtain loans from or have a charge account with that normally report to the credit bureaus.  Making timely payments on existing loans that you have reaffirmed, like car loans, will help to improve your credit score.  Obtaining new credit, within reason and that is manageable, and paying off the balances on time will improve your credit score.  There is no magic formula for how soon or when your credit score rebounds because it all depends upon what you do personally with your financial life after you have filed bankruptcy.

History is an important part of how your credit score is determined.  Establishing good financial practices over time will improve your credit score.  Establishing a savings plan to pay for unexpected expenses or to purchase something that is needed will help you avoid the tendency to rely credit.  Learning from past mistakes and avoiding the temptation to rely on credit to make ends meet will serve you well in the future and help you improve your credit score.  Will filing bankruptcy affect your credit score – Yes, but in the long run the affects may be positive.