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)
Word Count: 478
2/28/02 APWIRES 10:41:00
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