Payday Loans

Payday loan sign in Ridgeland, Mississippi

A neon sign hanging in the window of a local payday lender. Ridgeland, Mississippi

Mississippi has more payday lenders per capita that anywhere else in America

According to Huffington Post reporter, Christina Wilkie, “Mississippi . . . has more payday lenders per capita than anywhere else in America . . . .”  Not surprisingly many Mississippians find themselves trapped in the payday loan cycle.  This cycle starts innocently enough.  You find yourself in an emergency situation and run down to the payday loan store to get the money you need.  To take out the loan you pay a “fee” that may be as high as $20.00 per every $100.00 borrowed.  As you near your next pay period you find yourself a little short of cash and before you know it you are back at the payday store paying a fee to get enough money to make it until payday.

In Mississippi the interest on payday loans can exceed 500% per year

This “fee” is really interest.  If you rolled over a seven day payday loan from week to week through the course of a year the “fees” you would pay may be the equivalent of an interest rate in excess of 500% per year.  In other words, if you took out a $100.00 loan every two weeks to cover the weeks before, and paid a $20.00 fee each time, you would still owe the original $100.00 and would have paid $520.00 in fees over the course of the year.  You, therefore, end up paying five times the original debt in “fees.” Unfortunately many Mississippians find themselves in this situation. “Over 80% of payday loans are rolled over or followed by another loan within 14 days,” according to a March 2014 report by the Consumer Financial Protection Bureau.

Contrary to what you may have been told, payday loans CAN be included in bankruptcy

If your payday lender tells you that you cannot include their loan in a bankruptcy, they are wrong.  If you signed a contract with them saying that you would not file for bankruptcy protection that is just too bad for them, because you can.  Payday loans are unsecured debt that can be wiped clear by bankruptcy including both Chapter 7 and Chapter 13 bankruptcy.  Remarks such as these by a payday lender are potentially violations of the Fair Debt Collections Practices Act (FDCPA).  Read more about the FDCPA here. Such a statement may also subject the payday lender to penalties as a violation of the Mississippi Check Cashiers Act.

Can I be arrested for not paying back a payday loan?

No.  Nor can the lender threaten criminal prosecution to collect a payday loan.  The remedy that a payday lender has available is to sue you for a civil judgment, not a criminal action.  If your payday lender makes threats to this effect you may have a claim under the FDCPA.

If you find yourself trapped in the payday loan cycle and are thinking about bankruptcy as a possible solution to this and other credit problems please feel free to call me. To schedule an initial free and confidential consultation to discuss your particular situation call 601-853-9966.