After going through bankruptcy a few years ago, Latoya Gibson thought it was safe to assume that debt collectors would never bother her again.

In her dreams. The 30-year old public housing counselor in Fort Lauderdale, Fla., had the kind of consumer debt that never dies. Zombie debt, some call it.

According to the South Florida Sun-Sentinel, this phenomenon takes place when your credit card company sells off its bad debts. The buyer pays a few pennies for every dollar you owe and tries to turn that investment into a few nickels. They track people down and demand payment.

Often, bad debt buyers or their collection agencies will do one more thing that is especially harmful to your credit rating. It often happens in secret, and is very much illegal: they "re-age" the debt. In other words, they report old debt to a credit bureau as a new obligation.

South Florida consumer advocates, attorneys and debt counselors say re-aging happens all the time, possibly pushing cash-strapped citizens to apply for payday loans and other high-risk alternatives in order to make ends meet. It happens to people who are late on their accounts, too — not strictly those who are delinquent or in bankruptcy.

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As military payday loans - and their detriments - remain in the news, a conference on the topic has been scheduled. 

It will be held tomorrow at 10 a.m. at The National Press Club's Lisagor Room, 529 14th St. NW, Washington, DC. The man in charge of this payday loan critique? Dr. Charles Cushman a West Point graduate and retired Army officer. He's also the Associate Dean of the Graduate School of Political Management at The George Washington University.

Dr. Cushman will lead a discussion on the results of a study sponsored by Consumer Credit Research Foundation to learn more about military awareness, attitudes and usage of short term payday loans.

Reason behind the payday loan conference: In recent months, military pay day loan new has dominated the news. Up until now information about military awareness, attitudes and usage of payday loan lending products has been limited to anecdotal findings.

This is the first systematic examination of how and why members of the armed forces use these products and how they compare to their civilian counterparts. The results provide empirical insights from members of the military into the following:

• Cash loan usage (frequency, usage, etc.)
• Awareness and knowledge of payday loans
• Attitudes about financial well being
• Types of debt and credit options

 
Mark Jacobsohn of Relayer Benefits Group, an insurance and consulting firm, is concerned. When it comes to the nation's debt problems, he points to the 77 million baby boomers who will retire in the next 15 years. They aren't saving enough money for retirement.

While Jacobsohn isn't recommending no faxing payday loans as any solution, he mentions the fact that the nation's savings rate is about what it was during the Great Depression.

"There's a feeling that something will be there to take care of them, such as Social Security or Medicaid," says Jacobsohn. "They don't realize they'll have to spend down their savings in order to qualify."

Jacobsohn, who speaks and presents on financial planning, says there are many ways to save money, including 401Ks, certain types of life insurance and, increasingly, insurance for disability and long-term care. But more and more individuals are turning to the quick fixes of payday loans no faxing.

"People are living much longer and, thanks to medical advances, are surviving things (cancer, heart attacks, strokes), that would have been fatal 10 years ago," says Jacobsohn. "What is life-enhancing for a person, however, can be catastrophic for a retirement plan."

It's an odd problem. Living longer is a good thing. But not planning ahead and, therefore, needing to rely on cash loans? Not as good.

The nation's largest provider of payday loans stopped issuing the advances in Arkansas as of late last week, but said it would keep doing business in the state, according to the Arkansas News Bureau.

A spokesman for Advance America Cash Advance Centers, Inc., said that the payday company's 30 stores in Arkansas would begin operating as check cashers this week.

"We don't expect a disruption in services to our customers," Jamie Fulmer said. "We will operate under the existing law."

Current state law prevents licensed check cashers from offering "deferred presentment" checks over $400, according to the Arkansas State Board of Collection Agencies (ASBCA). But the state's Check Cashiers Act, passed in 1999, allows some out-of-state banks affiliated with check cashing firms not licensed in Arkansas to hand out small loans over that amount.

Peggy Matson, executive director of ASBCA, said Advance America received a license from the agency's board in March to offer check cashing services.

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We've covered past editorials that criticize the abundance of military payday loans in the country. The Roanoke Times has now presented us with a similar view. To wit:

I've been pondering the cover story in the June issue of Seapower magazine (pictured) about payday loan victims among military personnel - "particularly those in the lower ranks." And with last week's news fresh in my mind of two young American soldiers– private first classes - abducted and killed, possibly tortured, in Iraq, I am angry.

Low-level service people make up a particularly rich niche for the military payday loan industry, the magazine article informs me: "… They usually have a steady government paycheck with little to spare at an average of $1,200 a month for new recruits. Military families gearing up for deployment face extra expenses at home and abroad and are especially vulnerable to the promise of quick cash from payday lenders."

America's young volunteers are prime targets on any battlefield where the United States chooses to engage its armed forces, a risk the Iraq war makes brutally clear. Moreover, their service makes army personnel prime targets for the predatory fast cash loan industry back home. How shameful.

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The Witchita Eagle raises an issue that can be as risky as a payday loan: overdraft protection programs.

You can see billboard across the city for these Fidelity Bank services, advertised as "Your checkbook's best friend." And, don't get us wrong, people who occasionally bounce a check may appreciate it.

The program, like those at other banks, covers an overdrawn check instead of returning it to the merchant. Banks, of course, call the programs a courtesy to customers. Payday advance companies do the same for their loans.

But the Center for Responsible Lending calls them high-dollar loans. The group worries that some people are becoming too reliant on overdraft programs. Consumers spend $10.3 billion a year in overdraft protection fees, the bulk of that by repeat users who are continually overdrawn, a recent study by the center says.

"For repeat users of overdraft," said Eric Halperin, senior policy counsel for the center, "this is a credit source that in the long run is going to cause more harm than good."

Al Sanchez, a spokesman for Fidelity Bank, said the service is a "purely discretionary courtesy or privilege that the bank may provide to our customers from time to time … It is that simple."

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Let's take a look at the circumstances surrounding this consumer: Through medical expenses and a move across the country, she and her husband have over $25,000 in credit card debt.  

As the couple's credit score has dropped, interest rates have risen and the duo can scarcely afford minimum monthly payments. Is applying for a payday loan the answer or are there other alternaitves? 

First, you can back to the credit counseling agency initially contacted and tell it it want a plan to get out of debt. This may or may not be a formal debt management plan in which interest rates and fees are sometimes reduced, but it should at least be an action plan with specific steps for you to follow, one that doesn't yet require any faxless payday loans.

If a debt management plan is not for you, call your creditors. Explain about the medical emergency and ask for a hardship plan or an interest rate reduction. Many creditors will respond favorably to a well-documented history that shows events beyond your control caused your situation. Be sure you have a dollar amount you can afford to pay each creditor before you call.

Another option is to contact an attorney. First, ask that the attorney write and propose a repayment plan you can afford. Often, attorneys' letters get good responses. Then, if that fails, ask about a bankruptcy. The new rules make it more difficult, but not impossible, for you to get relief this way.

Finally, look into the possibility of a no fax payday loan. It can be convenient and affordable if you understand all aspects of it.

The Courier-Mail reports that Queensland, Austrailia residents are still being walloped with annual interest rates of 1,300 percent on short-term or pay day loans while the country's southern states are protected with caps of about 48 percent.

The State Government has been accused of dragging its feet on its plans to slash and cap the interest rates, but says more time is needed to achieve the most satisfactory outcome for consumers and lenders.

Consumer groups believe Queensland's relaxed laws compared to other states have contributed to the rapid growth of the short-term loan industry.

Local lenders contacted by The Courier-Mail were offering interest rates of 30 percent or 40 percent a month, compounding into hundreds of percent over a full year. Fair Trading Minister Margaret Keech would not agree to an interview or comment on a possible cap level, but said the needs of both lenders and consumers will be considered.

Queensland payday loan firms have been forced to detail all charges and fees in writing for five years after the Office of Fair Trading brought them under the Uniform Consumer Credit Code. The measures were intended to close a loophole that exempted full disclosure on loans of less than 62 days, but instead drew strong criticism for not capping rates.

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For over 14 months now, the members of one of the richest families around Cincinnati have been locked in a dispute. Later this week, The Enquirer reports, Judge Norbert Nadel will resume a preliminary injunction hearing involving Allen Davis and his two sons.

Davis, is former Indian Hill millionaire and banker now living in Sarasota, Fla. His sons, David and Jared, control a payday loan company named Check 'n Go. It's nation's second biggest player in the payday loan industry.

Inside the payday loan feud

Family relations began to crumble when Allen and his wife, Judith, separated in 1999 and divorced three years later, ending a 39-year marriage. But when his repurchase of her stock in CNG Financial (which owns Check 'n Go) was routed through the company, reissued as a stock option and booked as compensation - sticking him with a $13 million federal income tax bill - Allen hired Stan Chesley and filed suit against his sons.

His case boils down to this: CNG's borrowing from banks, in part to pay millions of dollars in dividends to its three principal shareholders - David and Jared, who each own about 32 percent of CNG's stock, and Allen, who owns about 28 percent - will ruin the company, he says. Allen wants Nadel to enjoin CNG from making further dividend payments on its payday loan business.

The two sides are not close to a resolution. Despite their proximity in Nadel's courtroom, father and sons haven't been seen exchanging a single word.

"It's a sad story," said Bob Kramer, a Fairfield business consultant and motivational speaker who sat in on two sessions last year. "It's kind of like a divorce, where it's lose-lose. Whatever they end up with in a settlement, they'll reducetheir cumulative family net worth by $3 million or $4 million because of legal fees. The longer the attorneys can keep the ball in play, the more ka-ching, ka-ching they hear. But the Davises will still be millionaires."

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The Payday Loan Times Police Blotter is at it again …

In Boise, copy are looking for a man who robbed a payday loan company this Saturday morning.The man walked into Nice 'n Easy Payday Loans, 328 N. Orchard St. around 11:30 a.m., showed a small silver handgun to a clerk and demanded money, police said.

The man fled on foot with an undisclosed amount of money from the quick payday loan operation. The robber is described as 25 to 30 years old, 5 feet 8 inches to 5 feet 9 inches tall with an average build, short hair and a brown goatee. At the time of the robbery he was wearing a dark blue baseball cap, large frame sunglasses, a red T-shirt, and blue jeans.

Anyone with information is asked to call Boise Police at 377-6790or Crime Stoppers at 343-2677.