TODAY'S TMJ4

Payday Loan Blamed For Ruining Man's Finances

By Michael George

MILWAUKEE - Wisconsin is the only state in the country that does not regulate the practices of payday loan companies. There's a movement to change that.

On Tuesday, a public hearing was held at the Washington Park Senior Center in Milwaukee. The hearing was hosted by the Social Development Commission. The goal is to work to solve problems like the one faced by David Bush, who is from Waukesha.

Bush says it started with a simple $300 loan from a payday loan service. He needed the money to pay his gas bill. When he couldn't pay the loan within the required two weeks, he says he was told it wasn't a problem.

"They told me, "Mr. Bush, you know you can just pay us the rollover fee and you don't (have) to pay us all that money back at once," Bush said.

So he paid the interest. But with the loan interest rate at 342%, the late fees (called rollover fees) soon became a bigger problem that the original loan. Within weeks, Bush was taking out loans just to pay his other loans.

Today, he's paying $500 a month just on interest, and he isn't making a dent in paying off the loan.

"They said they're going to repossess my car for $75," Bush said, pointing to the latest bill he received on Tuesday.

Bush's problem isn't unique. Opponents say payday loan services prey on low-income people by charging unreasonable rollover fees when they can't pay.

"The problem is the borrowers, when they go in, it's not explained to them the type of loan that they're taking out. They don't realize what they're getting themselves into," said Andy Gehl, a lawyer for the Legal Aid Society, which is working to educate people about payday loan services and also advocating for tougher legislation on their practices.

David Bush is hoping that legislation limiting rollover fees happens soon, so others don't suffer his fate.

"They should be illegal. One month it might be $62, the next month it's $66. One month it's $75. But, I really needed the money, so (there is) nothing you can say," Bush said.

Payday loan companies argue that the terms of their loans are explained to customers, and limiting their fees would cripple their businesses. They are lobbying against fee limits in Wisconsin.