AVOIDING THE PAYDAY LOAN DEBT TRAP

Transcription

1 AVOIDING THE PAYDAY LOAN DEBT TRAP CALL IN # FLORIDA PROSPERITY PARTNERSHIP

2 BILL MILLS PRESIDENT/CEO FLORIDA PROSPERITY PARTNERSHIP FLORIDA PROSPERITY PARTNERSHIP

3 THE FPP IS FUNDED BY: & YOU! FLORIDA PROSPERITY PARTNERSHIP

4 PLATFORMS FOR PROSPERITY WHERE WE LIVE WHERE WE LEARN WHERE WE WORK WHERE WE BANK WHERE WE START BUSINESSES WHERE WE GET HEALTHY WHERE WE GET SOCIAL SERVICES WHERE WE WORSHIP FLORIDA PROSPERITY PARTNERSHIP

5 REGIONAL PROSPERITY TOWN HALL MEETINGS Orlando - October 23 (9 am - 12 pm) (Brought to you by Heart of Florida United Way) Port Charlotte - October 26 (1 pm - 4 pm) (Brought to you by Charlotte County Family Services Division) Tampa - October 27 (11 am 2 pm) (Brought to you by Hillsborough Community College) Daytona Beach - October 28 (1:30 pm - 4:30 pm) (Brought to you by Campaign for Working Families United Way of Volusia/Flagler) FLORIDA PROSPERITY PARTNERSHIP

6 REGIONAL PROSPERITY TOWN HALL MEETINGS Sebring - November 10 (1:30 pm - 4:30 pm) (Brought to you by Highlands Prosperity Parntership) Lakeland - November 12 (9 am - 12 pm) (Brought to you by Florida Prosperity Partnership Central Florida) Miami - November 17 (9:30 am - 12:30 pm) (Brought to you by United Way of Miami-Dade) Manatee County December (1 pm 4 pm) (Brought to you by RenewGlobal and Manatee Community Federal Credit Union) Fort Myers - December 9 (9 am - 12 pm) (Brought to you by United Way of Lee, Hendry, Glades, and Okeechobee) Sarasota December 10 (1:00 4:00) (Brought to you by RenewGlobal and Manatee Community Federal Credit Union) FLORIDA PROSPERITY PARTNERSHIP

7 REGIONAL PROSPERITY TOWN HALL MEETINGS Tallahassee - January 19 (tbd) (Brought to you by Capital Area Community Action Agency, United Way of Big Bend, and League of Southeastern Credit Unions Foundation) Live Oak - January 20 (9 am - 12 pm) (Brought to you by UF/IFAS) Jacksonville - February 2 (10:30 2:00) (Brought to you by Chase Bank and RealSense United Way of Northeast Florida) Pensacola February 3 (Brought to you by Gulf Power and Community Action Program Committee) FLORIDA PROSPERITY PARTNERSHIP

8 REGISTRATION IS FREE:

9 With registration rates starting at $249

10 June 1 3, 2016 at the beautiful Portofino Bay Hotel Universal Orlando Room Rates Starting at $129 a Night!

11 Debt Management Credit Counseling Corp. AVOIDING THE PAYDAY LOAN DEBT TRAP FPP Webinar Wednesday, October 21, 2015, 1:00pm 2:00pm EST Presented By: Phil Heinemann, Executive Director

12 DMCC is a 501c3 nonprofit organization based in Lighthouse Point, FL. Accreditations: HUD Approved Multi-State Housing Counseling Agency U.S. Trustee Approved Bankruptcy Provider British Standards Institute ISO 9001:2008 Certified BBB of Southeast Florida (A+ Rating) Association of Credit Counseling Professionals National Association of Certified Credit Counselors National Industry Standards for Homeownership Education and Counseling.

13 Payday Lending in Florida Florida s Unique Regulations Counseling Opportunities DMCC Services Q&A

14 PayDay Loan Usage* U.S. State usage rates: 1% - 13% Avg usage rate: 5.5% Florida Avg usage rate: 7.0% Ranking (Tied 10 th ): Top 20% * Pew Safe Small-Dollar Research Project, Jan 2014

15 Loan Sources Local Stores Licensed/Subject to FL Regulations Typically Repaid With Post-Dated Checks Online Maybe Unlicensed/No Regulations Repaid Via ACH Withdrawals

16 What is the PayDay Loan Debt Trap? Borrower Unable to Repay Loan With Next Paycheck Borrower Obtains New Loan to Repay and Avoid Default - Additional fees and potential collection costs from Lender - Overdraft fees from Borrower s bank if insufficient funds in account Cycle Continues Until Borrower has Funds to Repay Fees and Interest Paid on Every Loan

17 Debt Trap Example Loan Amount: $500 Pay Period: 14 Days Loan Fee and Interest: $55 Cash Received: $445 If Borrower Requires 3 Months to Repay: # of Rollovers: 6 Total Fees and Interest: $385 Total Cash Received: $445 Total Amount Owed: $830

18 PayDay Lenders aka Deferred Presentment Providers Terms and Limits Maximum Loan: $500 Loan Terms: 7-31 Days Maximum Fees: 10% of Check + $5 Fee Maximum # Loans: One Rollovers: Not Permitted Cooling-off Period: 24 Hours Repayment Plan: Yes

19 Florida Payday Loan Fee Schedule and APR Loan fees equal a flat, non-refundable fee of $5.00 per loan, plus $10.00 per $ borrowed. Payable in-full on next Payday. Term In Days $100 $200 $300 $400 $500 Finance Charge / APR $15.00 $25.00 $35.00 $45.00 $ % % % % % $15.00 $25.00 $35.00 $45.00 $ % % % % % $15.00 $25.00 $35.00 $45.00 $ % % % % % $15.00 $25.00 $35.00 $45.00 $ % % % % % $15.00 $25.00 $35.00 $45.00 $ % % % % % $15.00 $25.00 $35.00 $45.00 $ % % % % % $15.00 $25.00 $35.00 $45.00 $ % % % % % $15.00 $25.00 $35.00 $45.00 $ % % % % % $15.00 $25.00 $35.00 $45.00 $ % % % % %

20 Florida s Unique 60-Day Grace Period Borrower Must Notify Lender On or Before Due Date Lender Not Allowed to Charge Additional Interest or Fees Borrower Must Obtain Credit Counseling From an Approved Agency: - Provide Lender Proof of Appointment Within 7 Days - Complete Counseling Session Within 60 Days Borrower Must Repay Loan After 60 Days Lender Must Accept a Reasonable Repayment Plan

21 Best Advice Avoidance! Budgeting Emergency Savings Loan Options and Alternatives

22 Loan Options and Alternatives Secured Credit Card - May Require Preliminary Budgeting - Builds Credit Credit Union Products - Example: PriorityOne Credit Union EZ Cash Loan 401k Loan (If Available) - Typically Low Interest Rate - Interest Paid to Borrower Family and Friends

23 PriorityOne Credit Union EZ Cash Loan* $500 to $1,500 Loans for Qualified Members Minimum 2 Years With Current Employer Repaid in 6 Months via Payroll Deductions All Credit Union Accounts in Good Standing 1 st Loan Limited to $500 No Credit Check $25 Processing Fee Interest at 18% APR * Broward County residents only

24 IF You Must Protect Yourself! Borrow Only What You Can Afford to Pay Back Verify Business is Licensed - Florida Office of Financial Regulation Beware of Lenders Who Only Request Your Bank Acct # - Scam Alert! Be Wary of Online Lenders - Many Unlicensed and Offshore; Difficult to Resolve Problems - Typically Higher Fees and Interest Rates

25 Florida Office of Financial Regulation Tel Consumer Financial Protection Bureau DMCC Where To Get Help Tel

26 Free Educational Materials Budgeting Handbooks Online Financial Literacy Course Debt, Money & Credit Concepts education.dmcccorp.org PayDay Loan Repayment 60-Day Deferment Letter ($25) Budget Review and Recommendations Debt Management Plan (State Reg. Fees) ACH Revocation Letter (If Needed)

27 Debt Management Plans State Regulated Fees - One-time Setup Fee ($50 Allowed less $25 Letter fee, if paid) - Monthly Fees (Typically $10 per loan vs. $35 Allowed) 12 Equal Monthly Payments - Considered reasonable by most lenders Amount Owed at Time of Plan Acceptance - No additional lender fees or interest added No Further Collection Activity By Lender

28

29 3310 N. Federal Highway Lighthouse Point, FL Tel: Cell: