Missouri Lawmakers Stall On Shutting Down Payday Loans

Payday lenders in Missouri annually siphon away $26 million from state residents, and lawmakers have previously considered adding changes that could protect borrowers. Missouri lawmakers have considered capping the interest rates on payday loans at 36 percent, but legislation has failed to proceed.

Interest rates on payday loans can go above 1,925 percent, and borrowers can pay back many times what they originally owed. One example, provided by Communities Creating Opportunity, described the story of a man who borrowed $500 by taking out a payday loan and ended up paying back $30,000. Communities Creating Opportunity is an outreach organization that estimates there are close to 1,000 payday loan shops operating in Missouri.

Before being shut down by the state Attorney General, payday lenders were signing on borrowers in Missouri from out-of-state. In March, Attorney General Chris Koster played a role in shutting down eight payday lenders operating from Nebraska.

Can Payday Loans Be Discharged in Bankruptcy?

Payday lenders often receive permission to withdraw payments directly from the checking accounts of borrowers. People who were already in dire financial situations now find themselves in even deeper holes, unable to pay other bills such as mortgages or student loans.

Fortunately, even with a snowball of debt, there are options available to borrowers. In most cases, payday loans are unsecured debt and dischargeable in bankruptcy. There might be different options available depending on a borrower’s situation, but the only way to find out for sure is to contact an attorney.

The Sader Law Firm – Kansas City Bankruptcy Attorneys