With consumer protections declining for borrowers, consumers are stuck wondering how to get payday loan debt help. Most people who take out Payday loans are often in vulnerable situations and need cash fast to help cover living expenses such as groceries, rent, car maintenance, and phone, gas and water bills. Consumers who take out payday loans often have poor credit. Payday loans are relatively easy to obtain, so consumers get caught in a debt trap cycle that keeps them borrowing. The Consumer Federation of America says that, “Consumers who use payday loans have an average of eight to thirteen loans per year at a single lender. In one state almost sixty percent of all loans made were used to cover the prior payday loan transaction; either through renewals or new loans taken out immediately after paying off the prior loan.”
The Consumer Financial Protection Bureau (CFPB) has targeted the Payday lender industry since it began for preying on cash-strapped borrowers stuck in the debt trap cycle. The CFPB was established as a direct result of the financial crisis that saw its lowest point in 2008. In the past, the role of the CFPB has been to protect consumers where federal financial laws apply and it has jurisdiction over financial companies such as credit unions, banks, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, and debt collectors operating in the United States.
In October Richard Cordray, the head of CFPB since it began in 2011, announced a new CFPB rule to stop payday loan debt traps. The CFPB was set to take further steps in cracking down on Payday lenders by holding them to new standards, such as making sure that borrowers had enough income coming in to pay back their loan and to cover their basic living expenses – and reducing the number of times that a borrower can roll over their Payday loans into newer, more expensive loans with higher interest rates. With interest rates and finances charges, payday borrowers end up paying between around 400-800% annual interest rate.
The payday lender industry has been very concerned about the impending CFPB crackdown. The $40 billion payday lending industry worried that the new CFPB rules would “cripple” and “devastate” the industry, stated Edward D’Alessio, executive director of the Financial Service Centers of America. “The rule will force the doors to close on hundreds of store fronts across the country, threatening 60,000 jobs,” said D’Alessio.
In November, Cordray stepped down as head of the CFPB and was replaced later that month with Acting Director Mick Mulvaney. The Former Congressman from South Carolina, had been confirmed as the Director of the Office of Management and Budget by the Senate in February of 2017 after being nominated to the position by President Trump. Mulvaney stated once during a House committee hearing, “I don’t like the fact that CFPB exists, I will be perfectly honest with you.” In 2015 he co-sponsored a bill to terminate the CFPB.
In January 2018, the CFPB took steps to halt the crackdown of the predatory practices in the payday loan industry by revising or repealing the new CFPB rules set forth to stop payday loan debt traps. The CFPB is also asking for zero funds to move forward on initiatives to protect consumers and announced it was dropping a payday lender lawsuit against a group of lenders that allegedly deceived consumers by not revealing annual interest rates of almost 1,000%.
There is a way out of the payday loan cycle for borrowers wanting to get out of the trap with a debt settlement. A debt settlement is an agreement between the payday lender and the borrower that the borrower will pay back a reduced amount of the total amount due. The payday lender would rather receive some funds from the borrower rather than push the borrower into bankruptcy and receive nothing. Borrowers can try to negotiate a debt settlement on their own or hire a debt relief attorney with a proven track record of client success stories. Consumers should be aware of debt relief company scams that often prey on consumers in desperate situations. Debt relief companies are not held to the same ethical standards under the law as attorneys in law firms. If you are stuck in a payday loan debt trap, give me a call at 858-217-5051, email me at email@example.com or “Ask a Debt Question” on my website. I offer a free consultation to go over your debt problems and debt relief solutions unique to your particular situation.
Daniel R. Gamez, an attorney focusing exclusively in debt relief, is licensed to practice in all state and federal courts in California and Texas. Mr. Gamez owns and operates the Gamez Law Firm in San Diego, CA. For more information, please contact Daniel Gamez at 858-217-5051, daniel@gamezl