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Military members a target for unscrupulous lending practices

On Behalf of | Aug 14, 2015 | Debt Relief

A 36-percent interest rate on a loan product seems close to outlandish and just flatly usurious, doesn’t it?

How does 700 percent sound?

That former rate was actually deemed to be within the outer bounds of reasonable by Congress when that body passed the Military Lending Act in 2006. That legislation focused upon problematic lending practices targeting military members and their families, with the 36-percent ceiling being applied on loans extended to that demographic.

Of course, the payday loan industry is marked by many wily and creative characters, some of whom promptly found ways to maneuver around the legal loan ceiling.

New loan vehicles not reasonably foreseen or even imagined by legislators — such as rolling lines of credit — were introduced to service members. That has resulted, as noted by a recent media article discussing the military and payday loan schemes, in “interest rates in the triple digits” that bring many military families to the brink of financial disaster — and, sadly, to flat-out financial ruin in many instances.

The Obama administration is seeking to do something about that, with the president recently announcing what the Wall Street Journal notes as “a significant expansion or regulations” to shore up existing law and close loopholes that some lenders are currently exploiting at the expense of military debtors.

Hopefully, that works, of course, although the resilience and creativity of predatory lenders is long-tenured and well-established.

There are many thousands of military members serving across the state of Florida. They deserve full disclosure and fair terms when they engage in loan transactions.

When that is not the case in a given instance, with a loan vehicle carrying repayment obligations that simply cannot be complied with, a military debtor might reasonably consider contacting an experienced debt-relief attorney for assistance aimed at restoring solvency and gaining a fresh financial start.

Source: The Wall Street Journal, “U.S. to expand Military Lending Act in effort to protect service members,” Gordon Lubold and Byron Tau, July 21, 2015


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