Catholic Charities rescuing from predatory lenders
An area nonprofit working to free borrowers from the debt spiral of high-interest, fee-laden payday or title loans has a lot to show for its first year. To date, Catholic Charities of Northeast Kansas has issued 153 fixed, low-interest loans to individuals and families through an innovative new program; 71 of the loans have been repaid.
“Catholic Charities of Northeast Kansas, along with local banking partners, is proud of the impact the Kansas Loan Pool Project has made on many local families caught in the predatory lending cycle of debt,” says Amelia Reyes.
As director of asset development at Catholic Charities of Northeast Kansas, she oversees financial and long-term programs. One of those is the Kansas Loan Pool Project (KLPP), a payday/title loan refinance program.
In August 2016, Catholic Charities got involved with the KLPP. The organization partners with Country Club Bank and Bank of Blue Valley to offer debt refinancing with an interest rate currently at six percent.
“It’s specifically for borrowers with predatory loans (payday and title loans with interest rates exceeding 300 or more percent),” Reyes says.
The KLPP allows borrowers with loans of $1,500 or less to pay off their predatory loans and free themselves from triple-digit interest rates and ruinous loan terms. To be eligible, they must meet certain criteria. Participants must have stable, traceable income and a Social Security number or individual taxpayer identification number, and their budgets must reflect the ability to make monthly loan payments.
“They must present documentation proving income,” Reyes says, adding, “It doesn’t have to be earned income.”
Income may be derived from government programs such as Social Security or Temporary Assistance for Needy Families, retirement or pension benefits or child support.
To help ensure participants gain a firm financial footing and steer clear of predatory loans in the future, the KLPP offers monthly case management for the duration of the loan and financial coaching at no charge to participants.
Once people begin using payday loans, the excessive fees and interest rates and unfair terms keep borrowers renewing the loans, driving them ever deeper into debt. One-fifth of borrowers using title loans end up losing their vehicles.
Recognizing the pressure these loans exert on households and communities, Catholic Charities also offers a food pantry and emergency assistance for rent and utilities to help prevent people from resorting to predatory loans, Reyes says.
The organization serves 21 Northeast Kansas counties. It offers the KLPP through emergency assistance centers (EACs) in Atchison, Kansas City, Lawrence, Leavenworth, Olathe, Overland Park and Topeka and rural-serving mobile resource buses. Reyes says they’re working to expand the KLPP.
She encourages those needing assistance to call the KLPP hotline number at 913-433-2050. Within a week, someone will call back to conduct a basic screening and direct callers to the closest EAC. For callers who meet basic eligibility requirements, there’s an application process that includes paperwork and in-person appointment with a case manager. The entire process takes around three weeks. The Kansas City and Olathe EACs each has a bilingual case manager.
Contrary to popular belief, most payday and title loans are used to cover living expenses – not unplanned-for emergencies. Eight out of ten workers in the U.S. are living paycheck to paycheck, according to a CareerBuilder.com survey last August. When faced with an unexpected expense, those with no savings turn to payday and title loan companies and become hopelessly mired in debt.
“The program (KLPP) has allowed us to give hope to those who have felt hopeless in their situation,” Reyes says, “and we are excited to continue this work in the community.”
