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Fast Cash, Exorbitant Interest: States Act to Reign in Lawsuit Lenders

April 28, 2014
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Across the nation, individuals in need of funding to file lawsuits are falling victim to financial lenders who claim easy, fast cash.

What these lenders fail to mention, however, are the maliciously high interest rates that can exceed 200 percent. For example, in a recent Michigan case, six women borrowed $635,000 to file a suit against the state, only to end up owing $3.1 million to their lender.

“[Lawsuit lenders] are investing in these lawsuits with no ethical or legal restraints in how they conduct themselves,” says former Georgia Attorney General Thurbert Baker, an outspoken advocate for lawsuit lending usury laws. “When you have that, it interferes with the lawyer-client relationship, not to mention the consumers who are getting re-victimized by having to absorb exorbitant interest rates.”

Stories like the one in Michigan have helped blow the whistle on lawsuit lenders, leading several states to cap interest rates between 25 and 40 percent.

Illinois, however, is moving in the opposite direction. Pending legislation in the state of Illinois would allow loan companies to charge more than 100 percent interest per year — well above the state’s current 36 percent interest limit.

Far from protecting consumers, this Illinois provision would lock in the predatory interest rates in favor of lawsuit lenders. Opponents of such lending practices warn that this would, in effect, institutionalize the abusive lending practices.

For more stories about the abusive nature of lawsuit lending, visit LawsuitLendingTruth.com.

 

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