There is an old adage, “If something sounds too good to be true, it probably is.”
This is especially true of lawsuit loans. All those lawsuit lenders you see advertising on TV make it sound so wonderful: Get a loan to pay bills while you are involved in a lawsuit and you only have to pay the loan back if you win your case. Lawsuit loans seem so easy and simple until the individuals who take out these loans have to start paying them back.
Lawsuit lenders charge as much as 150% interest, which is why many people now refer to these lenders as “lawsuit loan sharks.”
There are all kinds of horror stories of plaintiffs who end up with little or nothing from a judgment or settlement as a result of high interest lawsuit loan they took out. Illinois attorney Frank Avila explains in a video on www.LawsuitLendingTruth.com about how one of his clients took out a $50,000 lawsuit loan and ended up owing the lawsuit lender nearly $1 million.
Predatory, anti-consumer loans like these are causing a diverse coalition — including the National Black Caucus of State Legislators and the National Hispanic Caucus of State Legislators — to call for the lawsuit lenders to operate under the same types of reasonable regulations and rules other consumer lenders have accepted.
But the lawsuit loan sharks are trying to block the pro-consumer rules contained in legislation recently introduced in Springfield and instead are aggressively pushing their own legislation (SB 3169) that would allow lawsuit lenders to continue to charge exorbitant interest rates on the loans they provide.Specifically, the lawsuit loan sharks’ bill would set the lawsuit lending industry’s nominal rates at 72 percent, which for some people could mean an annual APR of more than 100 percent.
Adding financial incentives for lawsuits will lead to only one thing – more lawsuits – and yet Illinois is already ranked as one of the most litigious, plaintiff-friendly states in the country.
According to a recent report from the global research firm Harris Interactive, Illinois is ranked 46th out of 50 states for legal fairness.
Does this state really need more loan sharks and more lawsuits? What the state needs is more jobs, but the lawsuit loan sharks’ bill will drive jobs and opportunities to other states. Senate Bill 3169 will make Illinois even friendlier to frivolous lawsuits and at the same time, it will make our state less attractive to companies either looking to move here or expand their existing operations.
Illinois lawmakers have rejected lawsuit lending legislation in the past. They can once again protect consumers by rejecting the lenders’ latest proposal and working to pass common sense, reasonable regulations that protect consumers from predatory lawsuit lenders.
Travis Akin is Executive Director of Illinois Lawsuit Abuse Watch.