It’s not too terribly surprising that pawn shops have done very well in the wake of the economic downturn. With more and more average Americans stuck at the lower end of the income spectrum due to the new economy’s trademark unemployment and underemployment, a great many average Americans were forced to rely regularly on consumer credit to pay for their everyday bills, goods and services.
As a result, pawn shops have thrived throughout the recent economic malaise, providing the industry with new, low risk opportunities at the [literal] expense of unwary borrowers who will avoid defaulting on this type debt at all costs—just so they can keep this credit in an uncertain economic environment.
In fact sometimes people have even turned to pawn shops to foot the bill for a bankruptcy filing, hiring a bankruptcy lawyer with cash made from that vintage watch, old musical instruments, bikes, gold jewelry…whatever it takes. Just remember that if you pawn an asset prior to filing your bankruptcy that may make the pawnshop a secured creditor as to the asset in question. Keep in mind, also that during a bankruptcy you’d then list that pawned asset in the same way that you would list an encumbered piece of real property, or a vehicle, in your bankruptcy schedules.
But the real news is that this “pawn plan” for getting Americans out of their financial troubles—whether through a short-time cash infusion or the long-term benefits of bankruptcy—isn’t just for the nation’s low- or middle-class debtors anymore.
According to the Wall Street Journal’s Robert Frank, the newest phenomenon of the economic downturn are pawn shops for the (formerly) rich. “The rich have always faced periodic “liquidity shortfalls,” where they have plenty of assets but not enough cash. Yet apparently, those shortfalls are becoming more common in the bad economy. And the cash-poor rich are fueling a continued rise in high-end pawn shops. According to an article in the South Florida Sun-Sentinel, business is booming at Boca Raton Pawn, which will pawn everything from Hublot watches and Jimmy Choo shoes to diamonds and Lamborghinis. The shop recently got a call about a Picasso. ‘We looked around and there were really no pawn shops in the area catering to the rich,” owner Seth Marcus said. “We call ourselves a pawn shop, but we’re really a high-end collateral lender.’”
While many people thing that the stock market surges in 2009 and 2010 would mean the wealthiest Americans rich would be more flush without the need for quick liquidity through the high-end pawn process, pawn business is currently coming in all shapes and situations. From small-business owners pawning designer watches to make payroll to women pawning engagement rings to procure an animal companion, high-dollar pawn shop loans (at exorbitant interest rates) are now the new norm.
“Boomerang Lending, a Colorado-based business founded in the depths of the crisis in 2009, has pawned a $90,000 Ducati racing bike, a Corum Golden Bridge watch, and a solid-gold, 19th-century cocktail purse valued at $25,000. Boomerang Lending has dealt with a Picasso (what is it with pawned Picassos?). Their interest rate is 48%.”
You read that right: 48%. Now, no matter rich or poor, people can fall victim to pawn shop loans that lead them into even more financial trouble, whether it be a $100 cash out or $100,000 worth of costly collateral.
If you’ve already fallen victim to a payday lending scheme or too many pawn shop payouts, an experienced bankruptcy attorney can end your cycle of endless spending. To get the big picture on how bankruptcy works and how the laws in North Carolina can help you, speak with an attorney at the The Law Offices of John T. Orcutt.