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New SC payday lending laws

Date: Thu, 02/04/2010 - 10:34

Submitted by Ashley Hedrick
on Thu, 02/04/2010 - 10:34

Posts: 23 Credits: [Donate]

Total Replies: 6


I thought I would share this with everyone who is unaware of this new law(especially those residing in SC):: effective date February 1,2010:

Columbia, SC—A new payday lending law aimed at protecting South Carolina consumers took effect February 1, but it could end up hurting consumers who already had multiple outstanding payday loans.
The new law limits consumers to just one payday loan at a time. It sets up a statewide database, starting Feb. 1, to keep track of all payday loans to prevent anyone from having more than one. But the database will not include past payday loans that are outstanding as of Feb. 1.
The new law also doesn’t specify how payday lenders can handle outstanding loans, so they could try to cash all the post-dated checks at once to collect. That means if a consumer had five or six loans outstanding, the payday lenders could turn all those checks into his bank at once, likely leading to multiple bounced checks and overdraft fees.
Sue Berkowitz, director of the Appleseed Legal Justice Center in Columbia, who worked on the payday lending legislation, says a lot of consumers are going to be in trouble. “They can go to some other loan company, or they can go to an existing person that they have a payday loan with, take out a new loan for $550 that may cover one or two of those loans and they’re still going to have three that are outstanding that are never going to be factored into the database,“ she says.
Sandra Boone of Columbia says she has three outstanding payday loans right now, but doesn’t expect any problems. She plans to pay them all off with her tax refund. But she says the new limit of one outstanding loan per person will have a big impact, both on borrowers and lenders. “When you can’t get but one, it’s going to be a problem, because people used… everybody has more than one,“ she says.
Jamie Fulmer, spokesman for payday lender Advance America, which is based in Spartanburg, says a lot of lenders have already gotten out of the business, with the number of licensees dropping from about 1,200 to about 775. “You’re going to see, and have seen, a number of providers close,“ he says. That’s because with fewer loans, lenders have less ability to make a profit.
The new law does raise the size of the one loan, though, up to $550 from the previous $300.
The law also requires lenders to offer extended payment plans to borrowers who can’t pay off their loans. Berkowitz says, “If they run into problems, they need to go to every single payday lender and ask them to work it out. They also need to remember that they cannot go to jail for owing a payday loan. And that’s very important for people to remember. Now, if your rent check or your Piggly Wiggly check bounces, then you can go to jail. But if your payday loan check bounces, you cannot go to jail.“
She stresses that she’s not recommending that anyone not pay his debts, but says the best option for some borrowers in trouble will be to stop payment on the checks they gave the payday lender or to close their checking account.


In California you are only allowed one payday loan at time. But it is not enforced.


lrhall41

Submitted by on Thu, 02/04/2010 - 10:48

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You are very welcome:)

Yes, I hope they enforce this as well. I know it will be hard on others who have more than one loan at a time, but they will also work with you to get them paid off. Seriously, I thought you couldn't have more than one payday loan at a time before this article was posted. I tried a few years ago to get another loan through Advance America, and they told me that I couldn't get a loan until my other one was paid off. I'm glad now that they didn't let me, I just had to tough it out for a few weeks;)


lrhall41

Submitted by Ashley Hedrick on Mon, 02/08/2010 - 06:04

( Posts: 23 | Credits: )