Predatory Debt

By Thomas Sheffield

This year is the 400th anniversary of the first African slaves to arrive in Jamestown Virginia.  They were brought by Dutch traders.  These slaves made their masters wealthy as they built the foundation of this country.  Not only did they build the foundation of wealth but the beginnings of the wealth gap.  The shackles of bondage produced by slavery were removed in 1863.  Today it seems the emancipation from slavery was replaced by the shackles of predatory debt.  

Unfortunately, as the cost of living continue to rise, the salaries continue to be stagnant for many members of our community. Often times, we find ourselves working 1-2 jobs making less than $15 per hour.  When the cost of housing, travel and utilities are deducted, we still find ourselves in a hole.  To make up for the difference, we often times resort to going to payday and car-title lenders.  A direct result in using these services can be overdraft fees, loss of personal vehicles, the loss of a bank account, or forgoing other daily living needs.  

The Trump administration, which is to protect the public, has now changed direction and plans to repeal a rule aimed at stopping the predatory lending debt trap.  The rule requires payday and other small dollar lenders to make loans only after determining a borrowers ability to repay the loan.  The targets for these predatory loans are those of us that could least afford to pay the interest or fees that exceed the amount borrowed.  The poor, elderly, military veterans and communities of color are the targets.

Research shows, in Tennessee, the average loan is $221 and the average borrower may pay as much as $490 in fees to borrow $300 for five months.  When people are given false choices and are forced to either pay rent, buying food or paying a loan, they choose to renew the loan and to keep paying the fees.  25 states in the US have already passed serious legislation to regulate the functioning of payday loans and Tennessee is one of those states.  But now, payday lenders have sought ways to remove consumer protections and keep families in bondage of predatory debt.

The payday loan business is bolstered by a very strong lobbying arm.  They argue they make money available to consumers when no other options exist.  Unfortunately, this argument is partially true.  The companies catch people when they are hard on their luck and lack money not just for an emergency but for day to day living.  We need to work for a new kind of emancipation.  We should work for financial independence and invest in businesses that invest in the health and wealth of our communities.  Let your voices be heard by speaking to your representatives.  A better option is if we can stop doing business with the payday loan and car title lenders altogether.  As long as we continue to struggle to make a livable wage, these businesses will continue to thrive.  

Please feel free to contact me thomsustainableconsulting@gmail.com or you can follow me on Twitter @tcsheff. #Resist #WordsActionChange

Facebook Comments