According to an article in the Star-Telegram, the Texas Legislature is attempting to pass legislation that would establish government oversight in the largely unregulated payday loan industry.
The article said:
Among the measures are licensing requirements, a 36 percent limit on interest rates charged on such loans, establishment of maximum fees allowed and oversight of debt-collection practices.
"It is high time we put an end to the obscene profits that they are making off of our families who are just trying to make ends meet," Sen. Wendy Davis, D-Fort Worth, said at the news conference. Davis is author of SB 2131, which aims to regulate credit service organizations, a relatively new business model that most payday lenders in the state now use.
So, the payday loan companies have "new" trick up their sleeves, presenting themselves as CSOs (credit service organizations). Well, that neatly allows them to avoid much of the regulation and restrictions in place to control payday lenders and protect consumers from exorbitant fees. Davis' bill would close that regulation loop-hole by placing CSOs under the authority of the state office of Consumer Credit Commissioner.
Although the CSOs are currently required to register with the Texas Secretary Of State they are not required to reveal loan volume, collection practices or other details about their business. Also, the payday lenders have avoided the constitutional cap on interest rates put in place by Congress by calling their charges "service fees." As a result, consumers who take out payday loans are hit with very high fees and charges that can make their financial situation worse not better.
If you are a consumer who has taken out a payday loan, you may be able to discharge the payday loan during bankruptcy. Contact a bankruptcy attorney to find out how your payday loans might be handled during a Chapter 7 or Chapter 13 bankruptcy .