South Dakota Cancels Payday Loan Debt With Dollar Loan Center Decision

0


to play

The State Division of Banking may have written off all debts at the Dollar Loan Center in South Dakota by revoking the company’s license, the company’s attorney said Monday.

In practice, the ruling means a pass for the hundreds of borrowers whose names are attached to unpaid loans and ongoing small claims collection cases across the state.

The list of debtors includes those who took out payday loans from Dollar Loan Center before South Dakotas voted to ban them in November.

Following: Dollar Loan Center sues South Dakota for revoking its loan license

The company will not budge to collect debts for fear of violating the division’s decision, said Jack Hieb, the lawyer representing the company in its legal challenge against the state.

“I’m not even sure my client will appear in small claims court because he doesn’t know if this violates the order,” Hieb said.

Dollar Loan Center’s problems began with the adoption of Measure 21, which caps interest rates on payday loans at 36%.

The company closed its 13 stores in South Dakota shortly thereafter, but reopened over the summer with a “signature loan product” that capped rates at 36% but began charging late fees. after a week of default.

Following: Dollar Loan Center again closed by South Dakota Banking Authority

The state agency revoked the company’s lending license on September 13, saying the “signed loan products” it designed to comply with voter-initiated Measure 21 violated the law. State.

Two days later, the Division attorney sent the company a letter ordering it to “immediately cease all lending activity” and requiring proof that the company “was in compliance with the order.”

A copy of that email is included in the lawsuit, which DLC filed in US District Court in South Dakota last week. The company understood that this meant that it could not carry on any commercial activity.

Hieb confirmed Monday that DLC had also suspended the collections in court, out of “an abundance of caution.”

“It’s pretty hard to collect a debt that the state basically called ‘nil’,” Hieb said.

Following: Besieged by banking regulators, Chuck Brennan ends the Badlands empire

Dollar Loan Center has filed more than 290 small claims files across South Dakota since May alone, according to a file search last week, for amounts ranging from a few hundred to a few thousand dollars.

The last collection case under the company name was filed on September 13 – the day the Division of Banking withdrew the company’s license.

Of these, 156 remain in “pending” status.

The others are “terminated”, meaning they were either abandoned because the debt was paid or cleared by the award of a default judgment against a defendant who does not respond to the complaint.

The lion’s share of small claims cases ends thus, according to the administrator of the second judicial circuit, Karl Thoennes.

Following: After ending payday loans, group looks for alternatives

If a judge gave the DLC back the ability to collect old debts, defendants in the remaining cases could challenge them in court.

State court administrator Greg Sattizahn said it would be up to circuits and individual judges to determine how to handle the remaining cases, “as this will undoubtedly be debated between the parties and will have to be determined by the court. “.

Ultimately, any losses resulting from DLC’s inability to collect debts will be added to the damages it seeks from the state in its federal lawsuit, Hieb said.

“No one is interested in breaking the order. We are interested in being compensated for the harm that has been done, ”Hieb said.

The company shut down its remaining businesses over the weekend, including KBAD radio and the Badlands Pawn Shop line of guns. Owner Chuck Brennan said in an online statement he couldn’t afford to continue operating without Dollar Loan Center as a source of income, and legal fees are sure to increase.

Rob Weissenburger, 39, said he would be able to buy a house in Sioux Falls sooner if the court decided to write off his $ 1,197.71 debt to Dollar Loan Center.

Weissenburger said he took out a $ 1,000 loan a few years ago when he needed to pay bills and child support, but couldn’t make ends meet working at $ 11 an hour.

He was confused when he heard that Dollar Loan Center had closed and was shocked when he received a letter from the court telling him he had to pay off his debt.

“I was just like, ‘What am I supposed to do?'” He said.

Now, with a chance to write off the debt, Weissenburger said he hopes he can make a fresh start.

“It would be so awesome,” he said. “I could buy a house for myself and my children.”

John Hult is the Reader’s Watchdog reporter for Argus Leader Media. Contact him with any questions or concerns at 605-331-2301, 605-370-8617. You can tweet him @ArgusJHult or find him on Facebook at Facebook.com/ArgusReadersWatchdog


Share.

Comments are closed.