Predatory lending in Orange County is a major problem, and has led countless residents to seek relief through a Chapter 13 bankruptcy filing.
Orange County Bankruptcy Lawyer Vincent Howard has had many clients who were desperate for a loan and were preyed upon by shady lenders honing in on an easy target, someone they know will have little chance to repay them, especially when their soaring interest rates are tacked on. Their favorites include students, the elderly, those with limited education and those with poor credit histories.
In some cases, these firms employ extreme pressure, deceit and even outright fraud in getting you to sign. In a lot of cases, we're talking about subprime mortgages and payday loans. Really, though, predatory practices can be employed with just about any type of loan.
If you've been ensnared in one of these traps, Orange County Bankruptcy Attorney Vincent Howard can help.
But even once you've completed a bankruptcy, it won't make you immune to future scams - and there are new ones, it seems, cropping up all the time.
The Center for Responsible Lending, which is based out of North Carolina, recently addressed some of these issues.
One important thing to note is that you should not assume that it's only unknown, fly-by-night lenders that take part in these type of practices. These days, there are a lot of so-called reputable banks that are offering short-term payday loans that are short-term and very high cost. In some cases, these are known as "account advances." But don't be fooled. With these agreements, you could be roped into an annual percentage rate that can go all the way into the triple digits.
Let's take for instance a situation in which a bank is going to charge you $2 interest for every $20 you take out. They also charge a $35 late fee that you have to pay back no later than 10 days. Let's say you take out $400. That is going to cost you $40 in interest. What that means is that you've been handed an astounding annual interest rate of 365 percent. The whole purpose is to make you keep returning for more loans, and it becomes a cyclical problem that can lead to crushing debt.
Specifically, you'll want to be wary of any bank or lender that is willing to let you borrow more money than you could afford or if they tell you bad credit is no problem at all. Be particularly alert if the institution or company is asking you to exaggerate or make any false claims on your application.
It should also raise your eyebrows if the bank or lender is charging exorbitant fees or penalties for late payments, if they have you sign documents saying you aren't entitled to legal action against them or if there are any unnecessary add-ons, like insurance or other products, that are tacked on.
You should be asking the lender some tough questions, such as what the pay-off period is, whether there are late fees, will the late fees trigger higher interest rates for the rest of the loan and when will the loan rate go up.
You also need to have a serious analysis of your own finances, and ask whether you can realistically afford to pay back this loan. If the payments are going to account for more than 35 percent of your monthly income, you need to reconsider your options.
Orange County Bankruptcy Attorney Vincent Howard at Howard Law can help. You can reach us toll-free at 1-800-872-5925 or send us a message online.
Beware the predatory-lending trap, By Marcia Passos Duffy, MSN Money