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Payday Loan Law Makers Facing Facts [General Information]
January 7, 2008, 20:18:18
The good news is that lawmakers all around the country are looking closely at the effect that payday loans can have on the financial status of the poor and low income residents. The bad news is the results of banning these loans did not quite provide the results that several states were looking for which can just lead to even further problems all around the country if more states attempt to follow suit. While several states have started to ban payday loans, the results of the ban have certainly not been what was expected and anticipated by lawmakers. The results leave many states trying to decide if it is really best to ban the predatory lenders or leave them in effect.
North Carolina and Georgia are both two states that have toyed back and forth with the ideas of banning payday loans in order to help residents escape the trap of debt that the loans can create. However, the results have been rather shocking, as a general rule of thumb since banning the payday loan business in the state of Georgia alone the number of bounced checks, chapter 7 bankruptcy filings and complaints that have all been filed with the Federal Trade Commission has risen steadily. This is in stark contrast to the result that lawmakers were anticipating.
This leaves many lawmakers wondering if it is really a wise decision to ban the lenders. While the interest rates that are charged are enormous and the threat of a never ending debt cycle is quite large, the obvious effect that the ban has had on Georgia residents has certainly not been a good one. Trying to decide if the predatory lenders should be allowed to do business in states all around the country has been a huge topic of discussion for many years.
The problems lie in the fact that the interest rates can be quite enormous which essentially traps consumers into an endless stream of debt. However, when looking at the results of Georgia’s ban on payday loans it seems that the results could be potentially the same all around the country. This leaves lawmakers with the problem of should they allow the businesses to stay open trapping even more consumers in debt and keeping the number of bounced checks, as well as bankruptcy filings down, or should they close the payday loan business and look at new solutions to the problem to help the less fortunate residents.
These are all questions that are not easy to answer and probably will not have a final answer for quite some time. Working to ensure the best solution possible is reached for residents is certainly difficult to do and without a lot of careful research into the practices it could potentially cause even more damage all around the country such as what Georgia has experienced already. Working to ensure the overall financial protection of residents is a very difficult decision, especially when faced with the results of the Georgia ban on payday lenders.
Moving towards the future, the rules and guidelines are likely to be changed and the restrictions that payday lenders are likely to grow exponentially. The final hope is that residents will ultimately be protected and the financial status on residents in lower income residents improved.
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