Attorney at Law Charles H. Huber Speaks Out on New Payday Loan Regulations

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As the White House and Consumer Financial Protection Bureau seek to crack down on deceptive payday lenders and the loans they provide, Attorney at Law Charles Huber of the Law Office of Charles Huber offers suggestions

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Law Office of Charles H. Huber

According to Huber, the CFPB should strive to regulate both the addresses of these payday lenders and the practices of accepting payments in its upcoming first draft.

In a move to protect consumers from deceptive payday lenders advertising quick cash, the Consumer Financial Protection Bureau (CFPB) will soon draft the first-ever set of federal regulations for these lenders.

According to the New Republic (2/11/15), the $46-billion payday lending industry collects about 12 million from their customers every year -- and puts them into debt with sky-high interest rates they can't afford to pay off.

A payday loan is a small, short-term loan designed to be paid off within two weeks -- or by the time of the borrower's next payday. However, if a borrower can't pay off his or her loan on time, the fees quickly skyrocket.

Until now, regulating payday lenders had primarily been up to the state governments; however, these state regulations haven't been strong enough to keep payday lenders in line, says Charles H. Huber, Principal Attorney at Law for the Law Office of Charles Huber.

"I think there has been a reluctance at the state level to regulate them for fear of driving the businesses out of the state and losing tax revenue," Huber explains. "If the federal government regulates them, these rules would affect all states equally, and the states would not have to make tough choices on whether to regulate them or not."

The CFPB's new rules would help ensure a more transparent and fair short-term lending industry and work to educate consumers on the nature of the loans they're taking out, the New Republic reports.

According to Huber, the CFPB should strive to regulate both the addresses of these payday lenders and the practices of accepting payments in its upcoming first draft.

"I think the main area of regulation should require that physical address be published by the payday loan company," Huber says. "Many loans are obtained over the Internet, and no address is provided, or an address that is out of the country is given. I also think they should be required to stop the practice of taking postdated checks as payment, or at least make it clear that default on the loan is not also a criminal act of writing a bad check."

For individuals who have already fallen victim to a payday loan, it is possible to seek bankruptcy help as a means of discharging these loans and their fees.

"From a bankruptcy perspective, all payday loans are discharge-able in bankruptcy," Huber says. "Even if a loan was taken out close to the time of filing, raising a question of fraud, the amounts involved are usually too small for the payday loan companies to object to discharge in the bankruptcy."

About the Law Office of Charles Huber

The Law Office of Charles Huber is a St. Louis, Missouri based private law practice that provides legal services to clients with bankruptcy and traffic issues. Charles H. Huber is a member of the Missouri State Bar Association and has been practicing law for 30 years. For more information on the Law Office of Charles Huber, click here.

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