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Minnesota payday loan limits would include support exclusions

Deadlines are something that everyone deals with, and missing a deadline often has consequences. Where our monthly bills are concerned, making a late payment can have serious repercussions. But for individuals living paycheck to paycheck, the calendar doesn’t always work in their favor.

When a bill is due on Monday but the paycheck doesn’t come until Friday, payday loans are often a place where individuals turn to for a short-term solution. Although these loans can help individuals in a tight spot, there are also some risks involved, like extremely high interest rates that can lead to a debt cycle that may difficult to break.

Minnesota legislators have proposed some limitations that would help curb the problem.

HF 2293, passed in the House and under consideration in the Senate, would put limits on the interest rates that these lenders can attach to the short-term loan. As for the borrowers, this proposed legislation would place a limit on the number of loans that they can take out per year.

The total number of loans an individual could take out would be capped at four, but the lawmakers did include some exceptions for certain important obligations. For instance, those that require a fifth loan to pay for child support would be allowed to take out that loan with a maximum interest rate of 36 percent.

Although it may help in some circumstances in which meeting the obligation is difficult, a payday loan isn’t the only way to address the inability to make child support payments on time.

Child support orders are determined based on current financial circumstances, but what if those circumstances change substantially in the future? A child support modification can help individuals avoid debt due to an overwhelming support order. Those that are faced with this problem should discuss their situation with a Minneapolis family law attorney.

Source: Twin Cities Daily Planet, “Short-term lending could face loan, interest rate cap,” Sonja Hegman, April 25, 2014

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