20/20 Takes on Credit Card Debt; Payday Lenders as Lions in the Economic Jungle, and More

by Deepak Gupta

Tonight, at 10pm EST, the ABC News Program 20/20 will air an episode entitled "Flat Broke: Begging And Borrowing In America."  I'm reliably informed that the segment will include interviews with prominent consumer advocates, including Professor Elizabeth Warren of Harvard Law School and a NACA member or two.  You can read one of the stories that will be featured tonight here.   The episode looks promising and seems to be part of a noticeable upswing in mass media coverage of credit and debt issues.

On the other hand, if you're familiar with the work of the conservative ABC News correspondent John Stossel, you won't be surprised to hear that--despite every indication that the rate of complaints against abusive and out-of-control debt collectors is skyrocketing--he was somehow able to muster a story that's largely sympathetic to the collection agencies; debt collectors, it turns out, are people too.  ("Is Debt a Four Letter Word?  Why Some Americans Need to Learn to Pay Up").  Along similar lines, The New York Times yesterday ran an astonishing column by the Cornell economist Robert Frank, comparing payday lenders to blameless lions in a jungle of lax credit--moral outrage against the industry, the author suggests, is misdirected; they're just following their Darwinian role preying on weaker members of the community.

Comments

[Credit Card Services]

Ryleigh - I agree that bank overdraft fees are also a ridiculous amount - and should be somehow regulated (if it's not already). But that does not excuse payday loan centers from being unscrupulous in what they charge, because those rates ARE predatory.
Credit Card Services

[In Debt]

This is really nice and appreciating article.

hanna

[Luther]

I don't think many americans that feel forced to take out payday loans know alternative options. Many people that take cas advances are young low-middle class americans and the loan sharks target these people to become rich. Nowadays the payday loan companies are feeling the hit of the government, the military has banned all commercial cash advances to soldiers, sailers and airmen which is a huge step forward in combating payday companies. Some online companies are now charging 1300% which is totally insane I guess credit unions are becoming a popular alternative to payday loans but its said many americans don't know about them or they don't qualify to join a credit union.

Sources:
http://www.listsergeant.com/top_10_best_payday_loan_alternatives

[Conner F.]

Upon protecting the rights of the American Citizen base on the proposed bill that to abolished the said payday loan which gives a higher interest rate to American citizen of the U.S. that its seems today of the poverty has only the diminished acts by law of the legislative body to protect the consumerism. Virginia has joined the ranks of legislative caps, which are effectively banned, on payday lenders, capping interest at an inoperable 36%. Lenders can charge interest for the first 25 days, but if the loan is paid back in 25 days, no interest or fees can be applied and afterwards only 36% - effectively free or cheap payday loans. It seems that nearby states that had adverse affects from similar bans weren't enough to save payday loans in Virginia. Read more about payday loans in the Old Dominion at the Money Blog.

[No Fax Payday Loans]

It is always best to consider your other options before you take the plunge and apply for a payday loan. No fax payday loans do have there advantages, but the disadvantages are so obvious and as long as you can avoid applying for one, try to do so only apply for one when you are sure you have exhausted all the other options. We generally get allured by the short term, easily available no fax payday loans. Let, http://personalmoneystore.com/moneyblog/ give you a stepwise guide to financial freedom and make the first step for your future success.

[baraljohn14]

HI!
i somehow know that Foreclosure victims should also be concerned about the danger of the bank suing them after foreclosure and trying to take the new house or attach a lien to it.
Don't be a victim. Stop credit card debt now. We can help.
http://www.stop-credit-card-debt.com

[Bob]

Ryleigh - I agree that bank overdraft fees are also a ridiculous amount - and should be somehow regulated (if it's not already). But that does not excuse payday loan centers from being unscrupulous in what they charge, because those rates ARE predatory.

[Jennie]

I read the article on the 20/20 website and am not surprised that people live like the Peterson's. It sounds like the Peterson's need to learn to live within their means. This is what I believe to be the number one problem in America. The "I want it and I want it now syndrome". No one thinks a purchase through now a days, starting with a home that is to expensive for your budget, down to the pack of gum or cup of coffee you buy everyday. People like the Peterson's are everywhere and that is what is wrong with the economy, all these foreclosures and people filing for bankruptcy. If people would just look in the mirror and come to the realization, that they are in debt and need help, things could start to look better. Like the Peterson's, they only had 5 months left before they would have had no choice but to file for bankruptcy. Had they come to the realization earlier, they could have looked into other ways to manage their debt. Luckily for them they found a way out before it was to late. For so many people they do not seek out help before it is to late. For people who are reading this saying to themselves this is me, do some research and see what kind of programs are out there that can help you. I know that their are debt settlement programs and debt meltdown program out there that can fit almost anyone's budget and that work. These program can have you debt free in as little as 24 to 36 months. This of course depends on the person and how willing they are to work at it and change their life style. This is what it boils down to. In regards to the debt collectors being people too, yes they are but when they cross the line of collecting a debt and harassing the consumer, the consumer should have some rights too. I recommend referencing the Fair Debt Collections Practices Act. This act is in place for the consumer against harassing creditors/collectors. It will show you ways to help to eliminate the harassing collection calls.

[Ryleigh]

I as someone who works in the payday loan industry clearly have a better understanding of how the industry works. Payday loans do not charge an outrageous interest of 500%. In fact there is an annual percentage of 136.39% but because these are payday loans and you are due on your next pay date the finance charge ends up being $20 - $33 on the hundred. This does not seem like such an overwhelming fee when your car is broken down and you need $200.00 to fix your starter. You don't feel preyed upon when your bank account is overdrafted and you need help. I help people I do not prey on them. In Atlanta after payday loans where no longer allowed the banks made over 1.5 million dollars in overdraft fees. It seems to me that it is not the payday loan industry that is preying on lower class America, could it possibly be the banks that rake in the money after payday loans are outlawed are the ones actually preying on the people?

[John]

Foreclosure victims should also be concerned about the danger of the bank suing them after foreclosure and trying to take the new house or attach a lien to it. If the house does not sell at sheriff sale for an amount to pay off the defaulted loan plus the extra foreclosure costs and late fees, the bank may be able to sue for a deficiency judgment and come after any other assets owned by the former homeowners. The bank will have to proceed with a new lawsuit after the foreclosure process is over, though, which will cost them additional time and resources.
http://www.thejohnbeck.tv

[Darren erick]

If you want to get more information about unsecured loans, personal loans, instant loans visit http://www.loanswithoutcreditcheck.co.uk

[john]

Cash Advance Loan is a very short-term loan, so it does not require a detailed credit balance checking. Even though it is an unsecured loan, the lenders make sure of the fact that the borrower has the ability to repay the advance along with the interest on time. So, the eligibility factor does come into play while securing this type of loan. The age of the borrower should be 18 years or above. The person should be working with a stable and fixed monthly income, should have a valid income proof, social security number, and of course a bank account. http://advancemagnumcash.pixieinfo.com/articles.html

[Wayneg]

Simple solution to Credit card lenders' abuses - stop paying youir credit card bills.

If this sounds drastic, it is. But it works.

After I stopped making payments on my credit cards, it wasn't long before they started calling to ask why I wasn't paying. I told them that I wanted concessions - removal of all late or over limit fees, and reduction of interest rates.

At first, they all resisted, not unexpectedly. But when they became convinced that they would be getting absolutely NO payments until they agreed, they suddenly were able to remove the fees and lower the interest.

It won't be easy. You will need to stand your ground, and probably talk with them several times before getting the concessions, but it WILL succeed.

Oh, by the way, they also agreed to report to the credit reporting agencies (Equifax, Experian and Transunion) that I was "paying as agreed".

[Steve "The Credit Card Debt Man" B]

The problem here is easy credit, its more easy then walking into a booby trap in vietnam. The fact is they purposely make it very easy to get credit because of the large amount they will make in returened interest.

[Deepak]

David -- I take your point and I sort of expected someone to call me on this. Note that the column isn't by Frank Rich, though; it's by an economist named Robert Frank and it reflects an economist's brand of pragmatism. Obviously, as Frank says, changing the laws that permit predatory lending will be more effective than just getting mad at predatory lenders; that's a truism. But the two things are just as obviously linked and, for that reason, the author's claim that public outrage aimed at the payday lending industry is misguided and ineffective is wrong. As just one example, consider the recent military payday lending legislation. Who's going to disagree with the fact that this was a direct result of outrage at the payday lenders' targeting of military personnel? Public awareness and outcry about the practices of bad actors in the economy fuels legislation aimed at preventing those practices.