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Since 2006, payday loans have been illegal in our state, but that hasn’t deterred predatory lenders from finding a way to weasel their way into the lives of North Carolina consumers and sell this devastating financial product. And what’s worse is that a Yale law school study of payday loans has found a strong tie between the high-interest loans and bankruptcy!
The study showed that for those who took out payday loans, their risk of filing Chapter 13 bankruptcy within the next two years doubled. Interestingly, the research didn’t find a corollary between chapter 7 and payday borrowing. Interest rates on payday loans are close to 500% and are some of the highest interest rate financial products so it makes sense that NC has said “no thanks” and booted these unsavory lenders from our state to try and protect consumers.
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North Carolina Made Payday Loans Illegal, But...
Unfortunately, while our lawmakers can forbid physical payday loan establishments from popping up as store fronts, they can’t do anything about the myriad websites that make loans to North Carolina consumers directly over the internet. As a result of ongoing predatory lending tactics - this time on the web – many states are taking action to try and block the online lending as well. But some of the lenders are fighting back and having some success.
If you’ve seen the commercials for payday loans on TV you may have noticed that some claim to be affiliated with Native American tribal councils. The state of New York have fired off cease and desist letters to 35 different lenders but some fought back and claimed they had sovereignty from the payday loan ban laws and would continue lending as they pleased.
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States Fighting Back Against Online Payday Lenders
Still other lenders have backed down under pressure from West Virginia who sued 12 payday lenders for illegally operating in their state and have successfully blocked them from doing further business with consumers there. The question is when will North Carolina lawmakers get aggressive and act to protect us and our fellow citizens from these financial sharks?
The tribal-based payday lenders claim that they desperately need the profits to pay for much-needed services in their low-income communities. But since many of the people they are borrowing from are also low-income consumers, how is it okay to prey on one needy community to benefit another? Simply, it’s not. That’s a poor defense for these lenders to present and one that should not be tolerated.
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Payday Lending Is Bad News for Consumers
North Carolina Attorney General Roy Cooper says, “Payday lending is like needing a life preserver and being thrown an anvil.” If you’ve fallen prey to a payday loan that has you in deeper financial straits than you were before you borrowed, Cooper’s office has some options to help you.
And if your debts are so deep that you are considering filing a chapter 7 or chapter 13 bankruptcy, you need the advice of a reputable North Carolina bankruptcy attorney like John T Orcutt – especially if you have payday loans or title pawns in the mix. Contact us now for a free consultation at one of our conveniently located offices.