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Finding financial security after getting a payday loan in Louisiana

It seems like a great deal. Stop in and walk away with money in your pocket from a loan you receive that same day. The only catch: exorbitant interest rates and fees that can perpetuate a cycle of financial difficulties for the borrower. This combination can lead to debt and creditor harassment as the payday lender attempts to collect payment.

The Business Insider recently ran an article focusing on this problem, analyzing data produced by Pew Charitable Trusts, a nonprofit public policy group. The article highlighted a variety of ways that these businesses take advantage of people, reaping financial rewards from cash-strapped families. Some of the more concerning figures include:

  • The amount of money loaned by these companies. An estimated 12 million people in the U.S. borrow almost $50 billion from payday loan operations every year.
  • The amount borrowers owe for these loans. On average, a borrower who takes out $300 will pay the payday lender $800. That translates to $500 in interest and fees, almost double the original amount borrowed.
  • Location of payday lenders. The majority of these businesses are located in areas with high rates of poverty.

Critics argue these companies take advantage of the poor, offering quick money with very few requirements. These loans lead to additional costs, leading many borrowers to take out additional loans to pay of the original borrowed amount.

Louisiana law and payday loans

Under Louisiana's Deferred Presentment and Small Loan Act, payday loan businesses can only offer up to $350 in loans. In addition, the company can only charge $20 in interest and $10 documentation fee for every $100 that is borrowed. In addition, when a borrower receives $220 to $350 in loans, the total amount of fees cannot exceed $55.

It is important to note that the law does not keep payday lenders from charging interest on loans that are not paid on time. The law allows these lenders to charge up to 36 percent interest for one year after the due date.

Some states have put much stricter regulations on payday lending practices. In addition, the military essentially banned the practice. The Military Lending Act of 2007 was designed to help protect troops and their families from predatory lending practices that were said to negatively impact military readiness and harm the morale of troops and their families.

Legislatures within Louisiana have yet to take a similar stance. As a result, people can find themselves owing massive amounts of money and struggling to find financial stability. If you find yourself in this situation, help is available. One possible option is bankruptcy. Bankruptcy can lead to the discharge of this debt and help you find fresh financial footing. Contact an experienced Louisiana bankruptcy lawyer to discuss your legal options.

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