If you have been following our blog, you are familiar with the pitfalls associated with borrowing money from payday lenders. On the surface, this option may seem a safe one because the loans are capped at $1500 with fees or 35 percent of monthly grossed income, limited to a 90 day period and are debited from checking accounts. Problems mount when funds originally designated for repayment are allocated to purchase food, medicine, rent or other basic living expenses. Individuals required to renew their loans can be assessed administration fees in addition to paying interest rates as high as 565 percent. In Wisconsin, there is no cap on the annual interest of payday loans.
Maybe you have significant debt, but you're not sure of whether you should file for bankruptcy. After all, filing for bankruptcy is a decision no one should take lightly.
Read this article from today's Journal Sentinel to see how payday lenders get around the very laws designed to regulate them.
The Wisconsin Senate has passed a plan regulating the payday loan industry in Wisconsin. Under this legislation, the payday loan companies may not loan more than $1,500 at a time to consumers and consumers may not rollover the loan more than one time. Surprisingly, there is currently no limit on the rate of interest. The Assembly has a slightly different version of the Senate's plan. Some critics of the plan don't believe that it goes far enough to protect consumers from predatory lending. While others hold that such loans would not be available at all if payday loan companies cannot charge high interest rates to protect against the risk of default.