Month: July 2020

Should You Stop Payment on a Payday Loan Check?

Payday loans can be a difficult thing. The fact of the matter is that, while the actual fees charged for a payday loan aren’t all that high, the interest rate is extremely high when compared with other forms of borrowing. Add to that the fact that many people find themselves stuck in a vicious payday loan cycle where they have to take out the loans again and again and again, and it can be extremely frustrating.

Some people think that stopping payment on their payday loan check is a way to end the cycle. The payday loan company won’t be able to cash the check, and they’ll have to try to collect their money another way. While it will hurt your credit report, you justify stopping payment by telling yourself you’re going to save money in fees.

Here are some things you need to know about stopping payment on a check, before you decide to go this route:

Stopping payment doesn’t cancel your contract to repay the loan. This is an important point. You will still owe the money, and the payday lender can come at you with civil action if you do not.
You should notify your bank that you want to stop payment prior to the date on the check. Make sure you notify the bank both verbally and in writing.
There will probably be a fee to stop payment. The fee is usually about the same as a bounced check fee. You’ll need to provide your bank with the check number, date it was written, who it was written to, and the amount of the check.
The order to stop payment may only last six months. This can vary from one state to the next and from one bank to the next. You may be able to ask your bank to restore the funds and return the check if a check older than six months comes through, however.
Check state laws. Some states may put you at legal risk if you stop payment on a payday loan check. Alabama and Alaska let the payday lender pursue criminal action if you don’t make good on the check and close your bank account. In Utah, the lender can sue you for damages if it cannot make good on the check.
Make sure you thoroughly consider your situation before you decide to stop payment on a payday loan (or any other) check.…

Wisconsin Passes Payday Loan Reform

If you listen to the opponents of payday loans, you’d think that these companies were conceived in Hell and that their employees are the spawn of Satan himself. These voices are often loud, and it’s a pretty regular thing that they get heard by folks in state and federal government. Arizona’s Attorney General, for example, has gone after payday lenders on many occasions. There are other states, such as Illinois, that have passed a number of different measures aimed at shutting down payday lenders.

Wisconsin has recently passed legislation that is designed to combat the high interest loans provided by payday lenders. Proponents of the legislation argue that the high interest rates take advantage of the working poor, and that the rates are predatory.

Opponents of the legislation make their case based on free enterprise. They argue that there is a demand for short-term, low value loans in the marketplace, and that the only way for a company to make a short-term low value loan profitable is to charge what winds up being a high interest rate. They argue that the fees associated with a payday loan are relatively small when compared with fees for things like overdraft protection from a bank or a bounced check fee.

Unfortunately, there is speculation that this legislation won’t really solve the problem, and that the working poor will still be vulnerable to high-interest loans.

The problem with the legislation is that it doesn’t actually include any rate caps. Instead of limiting the fees that the lender can charge, it limits the amount that the borrower can borrow. The legislation caps the size of a payday loan at $1,500 or the equivalent of 35 percent of the family’s monthly income, whichever is lower. It would also allow borrowers to roll over their loan once.

The legislation also tries to reduce the number of payday loan businesses, as well as limit their locations. A payday lender would not be able to operate within 150 feet of a residential area, or within 1500 feet of another payday lender.

Up to this point, Wisconsin has been the only state to not put some regulation or another on their payday lenders. This particular legislation opens that door, although it does it in such a way that it may not have much of a beneficial impact on the folks who are taking out these loans to begin with.…