Little Rock Hardly a month ago I shared the disgust at the way lenders were ripping off young people facing difficulties handling their student loans who were then saddled with collection fees, exorbitant interest rates, and escalating debits many times larger than the original loans. An article in the Times today by John Collins Rudolf pulls the covers off of an equally pernicious ripoff of working people caught on short term loans and credit problems and then sucked dry by slicked out debt collectors, no-show courts, and inflated penalties and interest rates sneaked through compliant legislatures by fast buck lobbyists. Reading the article over and over this morning made me literally sick to my stomach with disgust and overcome by anger. What the frick?!?
The really hurting thing impoverishing working families and destroying any citizen wealth is the access these blood suckers are able to win directly to pay checks through garnishments of wages, which depending on the state can hardly leave the worker with enough to live. How can that be right?
One story in the article involved a man in Virginia – note to self: never get a loan in Virginia! He borrowed about $4000 from Beneficial Virginia, a rebranded branch of what used to be known as Household Finance or Beneficial Finance, a predatory lender we fought for years, which was eventually bought by HSBC, the giant Hong Kong and London bank. He fell behind, and they took him to court. In what they claimed was a usual thing, he didn’t contest or show up to court, figuring they would just take the $4000 from him. He should be so lucky. Instead they tacked on almost a grand in lawyers’ fees, added almost 27% interest, got a chunk of his check, and after six years he had paid $10000 out of his pay, and owed more than $3900! All of this was legal in Virginia, and probably way more states than I want to imagine. This is simple robbery without a mask or a gun.
Another story involving Capitol One bank (which hurt to read since they are now my bank, too!) had them taking $500 per month to pay off a $2400 credit debt swelled with $1800 in interest and fees.
In another Ruth Owens “…had paid nearly $3,500 on an original balance of $1,900. But Discover was suing her for $5,564, mostly for late fees, compound interest, penalties and other charges.” Robert Triozzi, the judge, called Discover’s actions “unconscionable” and threw the case out.
This is all a disgusting, predatory pattern. Low-to-moderate income family working to make it. Smallish loans or credit card problems and they fall behind. No representation by anybody and in denial and misinformation about the debt, and then a vicious collection regime that plays pile on until they suck the folks out virtually for life.
This has to stop. I promise you!