The OTOC Predatory Pay Day Lending Action Team has worked on reforming predatory lending in the last year by informing community members about the debt trap that often happens when people take out predatory loans, and by promoting LB 194, Senator Tony Vargas’s pay day lending reform bill that was introduced to the Nebraska Unicameral in 2017 and didn’t make it out of committee until 2018.
Through several house meetings and community education events, OTOC leaders explained why there needs to be limits on pay day loans- that people get stuck in a dept trap paying fees and never getting to pay off the principle. The community members who attend these events were encouraged to contact their state senators, especially those on the banking and finance committee, and encourage the elected officials to get LB 194 out of committee. LB 194 originally set limits on the amount of interest that could be incurred and would allow borrows to pay back the loans in partial payments rather than requiring the full value of the loan for repayment.
An amended version of LB194 was passed this unicameral session. This final version did not include a cap on fees and is just a small step in the right direction, but it is a step. More transparency is now required before someone agrees to the loan so they see a clear total on what they will be paying. There is also an option for borrowers to request an extended payment plan once every twelve months that would allow them to make smaller payments rather than pay the full cost at one time. The bill that passed also requires more reporting by lenders to the state Director of Banking and Finance. To read more about what the final version of LB194 does, click here.
Thank you to all leaders who attended house meetings or learned about the issue and contacted their senators.
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