Bill seeks to block arrests of borrowers that allow high-interest lenders to seize surety money

0

(Courtesy of Kim Raff for ProPublica) Jessica Albritton, at home with her children in Ogden on October 15, 2019, was arrested on warrant after missing payment on a loan she received from Loans for Less. A new bill before the legislature would repeal a law that allows creditors to seize money from a defendant’s surety.

Rep. Brad Daw – who fought for years against high-interest lenders in Utah – said he was flabbergasted when he read that one of them managed to jail borrowers who owed him money, then to seize their surety.

“I was like, ‘I can’t believe this is happening,’ Republican Orem said.

Daw is now pushing legislation designed to stop the practice. In a surprising twist, he says Utah payday lenders are backing his bill, HB319, which was introduced Thursday.

“Payday lenders find very quickly that a payday lender is not doing this,” Daw said. “They fully support the repeal of the article of the code” which authorizes seizure on bail. He sees him advance in the Legislative Assembly without too much difficulty.

Last year, ProPublica reported how Loans for Less – which offers auto title and installment loans at triple-digit annual interest rates – obtained warrants against people it was suing for non- loan payment.

Technically, borrowers have been jailed for failing to respond to a court summons requested by the lender because it is against the law to jail someone because of unpaid debt and Congress has banned jails for debtors since 1833.

Still, police officers appeared and threatened to be arrested if people failed to post hundreds of dollars in bail or were jailed until they could raise it.

ProPublica found at least 17 cases in which Utahns had in fact been imprisoned – from hours to days.

In 2014, state lawmakers passed a law that allows creditors to access sureties posted in civil cases. Now it is routinely transferred to high interest lenders instead of returned to defendants, as in most states.

“We’re just going to repeal this section completely” with the new bill, Daw said.

(Trent Nelson | Tribune file photo) Rep. Brad M. Daw, R-Orem, January 24, 2017.

It also proposes many other changes in the laws that regulate high interest lenders. “It was a tough negotiation, but I think we have consensus with all parties at this point,” Daw said. “So I hope we can move forward without too many problems.”

Other proposed changes include closing a loophole that some payday lenders have used to avoid a law that requires them to stop charging interest on their loans after 10 weeks and offer an interest-free repayment plan.

“We found that there were some payday lenders that were giving a signature loan to basically bypass the 10 week deadline,” Daw said. The bill would prohibit that.

Daw also wants to extend from 10 days to 30 days the period between the notification of borrowers and their prosecution.

Finally, the bill would require the state to collect significantly more data each year on payday lenders and other high interest lenders. This includes the number of loans made by payday lenders, the total amount loaned, the number of borrowers who have made loans, and the percentage of loans that are not repaid.

Daw’s frequent push for tighter regulation led payday lenders to funnel $ 100,000 in secret donations to defeat him in 2012 (he was re-elected in 2014) with help from the former attorney general of the Utah, John Swallow. It was among the scandals that toppled Swallow and led to charges against him and former Attorney General Mark Shurtleff.

Swallow was acquitted of criminal charges, while the charges against Shurtleff were dismissed before trial.

(Leah Hogsten | Tribune file photo) Mr. Money is located at 4128 S. Redwood and Access 2 Cash at 4132 S. Redwood.

The average rate charged by payday lenders in Utah last year was 522.26% per annum, or $ 10.02 for a $ 100 loan for seven days.

But beware of the buyer: The highest rate a Utah payday lender charged last year was an annual percentage rate of 2,607%, or $ 50 on a $ 100 loan for seven. days.

Leave A Reply

Your email address will not be published.