Payday and Money Tree Loans and Your Consumer Rights in Washington State

In the heart of Skagit County, where you find scenic landscapes mesh with a vibrant community feel, financial flexibility can be essential. For many residents, payday loans offer quick, short-term solutions to cover unexpected expenses.

These loans, including those offered by Money Tree and similar lenders, are a controversial yet widely used financial product. Washington enforces strict regulations on these loans to protect consumers from predatory practices while ensuring access to emergency funds when they are needed.

An experienced Mount Vernon attorney can help you navigate the ever growing complexities of these loans.

Payday loans are smaller dollar amount loans that are typically due on your next payday. Money Tree is one of the more prominent payday loan providers in Washington offering quick cash solutions with minimal credit requirements.

While these loans may be convenient, they also often come with high fees and annual percentage rates (APRs) that can keep you in a cycle of debt.

• Loan Amounts: Generally range from $100 to $700 in Washington
• Repayment Period: Due within two weeks or by the borrower’s next payday
• Interest Rates: Capped but still high
• Collateral: Often requires a post-dated check or electronic access to the borrower’s account

Washington state heavily regulates payday loans under the Washington State Consumer Loan Act (RCW 31.45) and the Payday Lending Act (RCW 31.45.073). These laws are designed to limit abusive lending practices while still allowing consumers access to this kind of short-term credit.

• Loan Limits: Borrowers can’t take out any loans that exceed $700 or 30% of their gross monthly income, whichever is less.
• Fee Caps: Lenders may charge a maximum of 15% of the loan amount as fees. For example, a $300 loan will come with a $45 fee.
• APR Caps: Although the fees are capped, the effective APR can still be very high. For a two-week loan, the APR can exceed 390%, depending on the amount you borrow.
• Repayment Plans: Borrowers are entitled to a free installment repayment plan after four consecutive loans with the same lender. This ensures they are not perpetually rolling over loans.
• Loan Database: Washington requires lenders to check a statewide database to ensure borrowers don’t exceed the loan limit or violate the borrowing cap rules.
• License Requirements: Lenders, including Money Tree, must obtain a license from the Washington State Department of Financial Institutions (DFI) to operate legally.
• Cooling-Off Period: After taking out eight loans in one calendar year, borrowers must wait 24 hours before obtaining another payday loan.

The DFI oversees payday lending practices in Washington and ensures compliance with state laws. They handle licensing, conduct audits, and investigate consumer complaints. Borrowers can report violations or predatory practices to the DFI.

Consumer protections ensure transparency, fairness, and accountability when it comes to the entire payday lending process. One of the core protections you will find is the requirement for mandatory disclosures. This means lenders are obliged to provide you with clear and comprehensive information about your loan terms before an agreement is made.

You should receive a breakdown of all fees, the APR, and the repayment terms. By ensuring that you are fully aware of the financial commitment you are making, Washington’s regulations help mitigate the risks associated with unexpected fees or financial strain.

Payday lenders must also follow both federal and state guidelines for fair debt collection, which provide restrictions on harassment, threats, and misleading communication. This prevents them from engaging in aggressive or unlawful practices to collect overdue payments.

Finally, Washington law prohibits the criminal prosecution of borrowers who fail to repay payday loans. Unlike other forms of debt, payday loan defaults can’t result in criminal charges, protecting consumers from facing severe consequences like arrest or jail time due to an inability to pay.

Protections like these offer you greater peace of mind and ensure you are not subject to extreme legal penalties just because you can’t meet the repayment terms of a payday loan.

As you know by now, payday loans provide a quick solution for those facing immediate financial needs, although they do come at a high cost. It is important to explore all the options available and see what can help ensure lower fees and greater long-term financial benefits.

One alternative is a personal loan, which traditional banks and credit unions offer. They typically come with lower interest rates and more flexible repayment terms compared to payday loans, making them a more affordable choice when you need emergency funds.

Another option is a credit card advance. While the interest rates on cash advances are usually higher than regular credit card purchases, they are still often lower than the rates you will find associated with payday loans. This may be a better alternative for you if you already have access to credit.

If you are gainfully employed, an employer advance may be another option. Some employers provide paycheck advances to their employees, allowing them to access money quickly without the high fees and interest rates of payday loans.

Consider these alternatives to avoid the high costs and potential downsides of payday loans while still securing the financial assistance you need.

Payday loans are available to those with bad credit because they are based on the borrower’s income and ability to repay the loan on the next paycheck, not their credit score.

Payday lenders in Washington can’t roll over loans. If you can’t repay the loan in full by the due date, you can request an installment repayment plan. This law aims to prevent the cycle of debt that often occurs when borrowers repeatedly extend payday loans.

Payday loan debt can be discharged in bankruptcy because it is considered unsecured debt. In Chapter 7 bankruptcy, payday loan debt is eliminated, while in Chapter 13, a repayment plan is created to pay back creditors, including payday lenders.

Washington offers different programs to help you pay back and manage payday loan debt. One of them is the Debt Management Program (DMP) through nonprofit credit counseling agencies, which can help you consolidate your debts and even negotiate better terms.

If you default on your payday loan in Washington, the lender may attempt to collect the debt through legal means, including collections or filing a lawsuit against you. However, this can’t result in criminal prosecution according to Washington law.

If the lender wins the lawsuit, they can garnish your wages or levy your bank accounts. So address any issues with repayment early on and communicate with the lender as soon as possible to explore other repayment options.

A Skagit County, Washington, attorney can be a valuable resource as you tread the often rocky path of payday and Money Tree loans.

If you find you can’t repay a payday loan or Money Tree loan, a Skagit County legal professional can negotiate with the lender on your behalf. They can help you explore options for reducing the total amount owed, setting up more manageable repayment plans, or even getting the loan forgiven under certain circumstances. Count on them to protect your rights and help you avoid more serious legal consequences.

If payday loans have become unmanageable, a Skagit County attorney can advise you on whether filing for bankruptcy might be the best solution. While both Chapter 7 and Chapter 13 bankruptcy can offer relief from payday loan debt, it’s important to understand the long-term implications.

A skilled attorney can walk you through the bankruptcy process, help you determine eligibility, and represent you during proceedings to ensure you receive the maximum benefit and protection under the law.

If a payday lender has taken legal action or you are facing a lawsuit for non-payment of a payday loan, a Skagit County attorney can represent you in court. They can help you prepare a defense, explore your settlement options, and ensure your rights are not violated during litigation. Their expertise also covers ensuring any judgments against you are fair and in line with state laws.

A skilled attorney certainly can provide you with the expertise and support you need if you are dealing with payday loans in Skagit County, Washington. Count on them to advocate for you and handle a wide range of tasks, from negotiating debt settlements and filing for bankruptcy.