Short-term and payday lenders have plagued low-income areas for years, but fortunately, state laws have made progress towards completely banning the practice. At least 14 states right now have effectively prohibited payday lenders from operating within state lines. However, for every local lender banned from a state, there are a dozen online lenders that have no boundaries.
Online payday lenders have become internet predators, hunting as they please. They are able to operate without regard for state policy, and are facilitated by banks.
Online payday loans are extremely easy to apply and qualify for, generally requiring little more than a name, employment history, and bank numbers. Payday lenders approve almost any application and deposit the money into the provided account number.
Lenders are typically given permission to access the bank account in question as part of the deal. This allows them to automatically draft money out of the account on the due dates. This is one of the more dangerous aspects of the loans as there are a number of potential issues that can dig you into a deeper hole.
Unlike other types of debts and loans such as car payments or credit card bills, the borrowers have no control over when payments are made. Lenders may debit the account just before you try to pay rent or bills. The lenders often have no concern for your need of rent money or groceries.
Lenders will repeatedly attempt to take out payments from the account, which can lead to multiple overdraft fees, thereby making an already arduous situation more difficult. Lenders also have a habit of harassing people at work and at night when a payment is late.
Often, after accepting the loan the first time, it is incredibly hard for a borrower to break the cycle. These collection techniques and timing of the repayments tend to leave the borrower with no money to pay their bills, which makes it tempting to accept another loan, and then another, all the while adding up interest and fees.
These lenders are preying on low-income individuals and households. Without more government regulation and enforcement, they will continue to bite chunks out of borrowers. Speak to an attorney about the possible benefits of filing for bankruptcy protection.
Garland & Mason, L.L.C. – New Jersey bankruptcy lawyers