Our Office Location
20 South Clark Street
Chicago, IL 60603
Payday Lenders Agree to Forgive Debt, Pay Refunds in Indiana
Associated Press Newswires
Copyright 2002. The Associated Press. All Rights Reserved.
Thursday, February 28, 2002
Two payday lenders agree to forgive debt, pay refunds in Indiana
INDIANAPOLIS (AP) – Two payday lending businesses, one based in Tennessee, have agreed to proposed settlements totaling $11 million after the Indiana Supreme Court ruled that such loans are subject to the state’s interest ceilings.
About 140,000 customers of Indiana offices of Check Into Cash and Check ‘N Go Indiana Inc. would be eligible for refunds and be forgiven $5.1 million in debt under the settlements, The Indianapolis Star said in a story published Thursday.
The settlements await approval in U.S. District Court here.
Three other settlements involving smaller lenders already have been reached in that court, with two other cases pending in northern Indiana, said Chicago attorney Daniel Edelman, who filed lawsuits against Cleveland, Tenn.-based Check Into Cash and Mason, Ohio-based Check ‘N Go.
Those complaints and other lawsuits were filed after the Indiana Supreme Court ruled in August that payday lenders cannot charge more than the maximum 36 percent annual interest rate under the state’s consumer credit code.
Since then, the number of payday loan branch locations in Indiana has dropped 39 percent, from 580 to 356, according to the Indiana Department of Financial Institutions. The number of payday loan operating licenses in the state has nearly dropped by half, from 117 to 65.
Many payday lenders have said they would be unable to make money following the court ruling. Some have begun making loans through out-of-state banks that are not governed by Indiana’s rate caps.
Under payday loans, borrowers write postdated checks for the principal and a finance charge of up to $33 a transaction. If they cannot pay when the loans come due, they can renew by paying an additional finance charge without paying the principal.
Before the ruling, a two-week payday loan of $200, with a finance charge of $33, amounted to an annual rate of 402 percent.
The Check Into Cash settlement affects about 75,000 customers who obtained loans in the chain’s Indiana offices from 1995 until last Aug. 16. The Check ‘No Go settlement involves 65,000 customers from 1996 until last Sept. 1.
Check Into Cash has agreed to refund $3.9 million and Check ‘N Go $2.4 million, but those amounts will be reduced by legal and other expenses to be filed before a May 14 court hearing on whether to approve the settlements.
The amount each customer receives also will be based on the number of loans they obtained and on how many customers file claims. Forms were mailed Feb. 13 to the last known address of each customer eligible to file a claim.
Check Into Cash has agreed to forgive $1.6 million in unpaid customer obligations; Check ‘N Go will forgive $3.5 million.
“We think these are very good settlements,” said David Pope, an Atlanta attorney representing customers.
John Rabenold, a spokesman for Check ‘N Go, called the financial impact difficult, but “we’re glad that the litigation is over.”
—- INDEX REFERENCES —-
KEY WORDS: AP STATE WIRES: TENNESSEE
NEWS SUBJECT: English language content; Lawsuits; General News; Legal/Judicial; Corporate/Industrial News (ENGL LWS GEN C12 CCAT)
STORY ORIGIN: INDIANAPOLIS
NEWS CATEGORY: FINANCIAL/BUSINESS
REGION: Tennessee; Southern U.S.; United States; North America; United States – Tennessee; United States – Indiana; United States; North American Countries; Indiana; Midwest U.S. (TN USS US NME USTN USIN USA NAMZ IND USC)