When Lenders Sue Borrowers, Quick Cash Can Turn Into a Lifetime of Debt

ProPublica, December 13, 2013

Five years ago, Naya Burks of St. Louis borrowed $1,000 from AmeriCash Loans. The money came at a steep price: She had to pay back $1,737 over six months.

“I really needed the cash, and that was the only thing that I could think of doing at the time,” she said. The decision has hung over her life ever since.

A single mother who works unpredictable hours at a chiropractor’s office, she made payments for a couple of months, then she defaulted.

So AmeriCash sued her, a step that high-cost lenders – makers of payday, auto-title and installment loans – take against their customers tens of thousands of times each year. In just Missouri and Oklahoma, which have court databases that allow statewide searches, such lenders file more than 29,000 suits annually, according to a ProPublica analysis.

ProPublica’s examination shows that the court system is often tipped in lenders’ favor, making lawsuits profitable for them while often dramatically increasing the cost of loans for borrowers.

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