Utah Payday Loan Debt Leads to Arrests
Some Utah payday loan firms are going after debtors in small claims court, which has led to jail time for some who were unable to appear, according to nonprofit news source ProPublica. Though it’s not a crime to owe money to a lender, failure to show up for court can result in incarceration, and for those who lack access to transportation, child care, or time off, getting to court can be impossible.
That’s what happened to a 70 year-old veteran who didn’t have the money to fill up his gas tank. As a result, he missed his hearing and was arrested while caring for his granddaughter in his home.
In the period between September 2017 and September 2018, 66 percent of the small claims cases heard in Utah were filed by high-interest lenders, according to court record analysis. State data shows that one payday lender was responsible for 95 percent of the small claims cases in suburban South Ogden in 2018. Thousands of cases are filed each year across the state.
It’s no surprise that borrowers have difficulty repaying their payday loans in Utah. There’s no limit to what lenders can charge, and the average APR is 474 percent. Borrowers already strapped for cash often can’t keep up with their expenses while paying these interest rates.
One Utah payday lender said that more than half of borrowers returned to the business for another loan. But that’s not because customers were happy with the service they received; most borrowers go back out of necessity.
And when those borrowers can’t afford to show up to court, the payday lender that filed the claim wins. After that, the lender can garnish a borrower’s wages and even take their property. And if defendants don’t show up to a supplemental hearing, they can be arrested.
Between September 2017 and September 2018, it is estimated that 3,100 small claims cases resulted in arrest warrants. And 91 percent of those warrants were for debtors that owed money to a high-interest lender, such as a payday lender or title lender. To get out of jail or avoid incarceration, some debtors borrow even more money to make bail.
Before 2014, defendants would receive their bail money back. But a law passed by state legislators now allows creditors to keep the bail money posted by the defendant.
Consumer advocates also worry that many borrowers don’t have the money for a lawyer and often don’t understand their rights in the court system.