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The sharks are circling again at the General Assembly

Loan sharksState lawmakers have been taking a spring break this week and given the flood of disturbing bills introduced of late, it’s enough to make you wish they’d just stay away. Two new anti-consumer bills pushed by predatory industries make for classic cases in point.

As is detailed on the main NC Policy Watch site this morning by veteran bankruptcy attorney William Brewer, Number One is the proposal to introduce wage garnishment in North Carolina for general debts like credit card bills. As Brewer explains, this proposal would end a nearly 150 year-old rule in North Carolina that general creditors cannot seize money from people that is necessary to support their families.  It would also unleash a a bevy of predatory national profiteers that buy up old consumer debt for pennies on the dollar and, perhaps most disturbingly, spark a wave of bankruptcies. Here’s Brewer:

“As practical matter, the only refuge for such an unfortunate wage earner will be to file bankruptcy. But here’s the rest of the story: North Carolina has one of the lowest bankruptcy filing rates in the nation. For the first quarter of 2014, the national average for bankruptcies was 3.23 for every 1,000 people. North Carolina ranked 40th among the states with a rate of 1.82.

By contrast, the rates in our sister states in the southeast that allow with wage garnishment along the lines of Senator Brock’s proposal are the highest in the nation. Tennessee is first with a rate that’s 350% of North Carolina’s. Georgia and Alabama are second and third with three times the North Carolina rate. Virginia has a rate 70% higher than North Carolina. South Carolina, which has no wage garnishment, has a filing rate 13% lower.

The conclusion from all this is inescapable: if the General Assembly and Gov. McCrory enact a law that dramatically expands wage garnishment in our state, bankruptcy filings will soar by 200-300%.”

Sadly. debt buyer lobbyists aren’t the only ones pushing lawmakers to soak struggling consumers. The high-interest finance companies are back with yet another bill to jack up rates on small consumer loans — i.e. the ones they succeeded in raising just a couple years ago.

As Raleigh’s News & Observer explains this morning, the new bill would send effective interest rates on these loans into the stratosphere:

“Under current law, the interest rate on loans of up to $1,500 are capped at 30 percent.

The new bill avoids any mention of interest rates, instead stipulating that the ‘installment handling fee’ that consumers can be assessed monthly is capped at $5 per $100 of the loan amount up to $500. For loans above $500, the rate is $4 per $100 above the loan amount.

On a $500 loan, the monthly fee would be $25 per month, or $300 per year. That translates to an interest rate of 60 percent, double the current maximum rate, [consumer advocate Ellen] Harnick said.”

The bottom line: The last thing North Carolina needs to do right now to its struggling working class consumers is sock them with more high cost loans and/or allow out-of-state debt buying companies to put them out of their houses by garnishing their wages. Let’s hope both proposals never make it back from spring vacation.

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The sharks are circling again at the General Assembly