By Harry Samler and Phil Riley – WGCL-TV (Watch Now)
If you ever get a check in the mail from a lender offering to help pay your bills, do not cash it! What most people don’t realize is that if you cash the check, you are agreeing to a high-interest loan.
The predatory checks almost bankrupted a Hampton couple.
Tony and Glena Compton are two very lucky people. This time last year, Tony wouldn’t be out here playing his guitar, he’d be pawning it. The Comptons were in a mountain of debt and it just kept growing.
“It’s the devil to live with, I mean you have to worry all the time and it’s not worth it,” he says.
It all started with a trip to the mailbox and a letter that came with a check. The Comptons live on a tight budget, but with some unexpected bills, he saw the check and saw relief. All he had to do was go to the bank.
“I looked at it real good, I said this thing, I can cash it, I’ll cash it and make payments,” he says.
Sure he knew it was a loan, but this loan was something else. There’s no credit check required, just a check in the mail with interest rates that reach 60 percent.
In 2012, Ralph Hudgens, the state’s insurance commissioner, gave a small group of lenders the green light to target low-income families with what the industry calls live checks.
If you talk to consumer watchdog groups like Georgia Watch, they’ll tell you this is predatory lending at its lowest. It’s a practice that could easily be stopped.
Earlier this year, State Senator Elana Parent sponsored a bill to ban the live checks. The Comptons testified before the state’s finance committee, but the bill got stuck in committee. Parent says she will introduce the bill again next session.
The Comptons were so deep in debt, they started rolling one loan into another. Eventually, the lender Republic Finance sued the Comptons. Lucky for them, two attorneys, Joel Thrift and consumer rights attorney Matt Weatherington, stepped in for free.
They gave us some credit to.
“The only reason this resolved as favorable as it did is because of your leadership on this issue, and we thank you very much for being involved.”
Although we can’t disclose the terms, we know the Comptons settled the case. They are happy and they want everyone to know that if you get one of those live checks in the mail, throw it out.
If you have a live check and got stuck in a loan paying 30, 40 or 50 percent, we want to hear from you. Call me at (404) 327-3030, or email BetterCallHarry@cbs46.com.
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