AVOIDING THE PAYDAY LOAN DEBT TRAP

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559-546-1200

225498695

FLORIDA PROSPERITY PARTNERSHIP

AVOIDING THE

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B

ILL

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ILLS

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RESIDENT

/CEO

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LORIDA

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ROSPERITY

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ARTNERSHIP

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T

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FPP

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FUNDED

BY

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FLORIDA PROSPERITY PARTNERSHIP

&

Y

OU

!

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P

LATFORMS

FOR

P

ROSPERITY

•

WHERE WE LIVE

•

WHERE WE LEARN

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WHERE WE WORK

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WHERE WE BANK

•

WHERE WE START BUSINESSES

•

WHERE WE GET HEALTHY

•

WHERE WE GET SOCIAL SERVICES

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R

EGIONAL

P

ROSPERITY

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OWN

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EETINGS

Orlando - October 23 (9 am - 12 pm)

(Brought to you by Heart of Florida United Way)

Port Charlotte - October 26 (1 pm - 4 pm)

(Brought to you by Charlotte County Family Services Division)

Tampa - October 27 (11 am – 2 pm)

(Brought to you by Hillsborough Community College)

Daytona Beach - October 28 (1:30 pm - 4:30 pm)

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R

EGIONAL

P

ROSPERITY

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OWN

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EETINGS

Sebring - November 10 (1:30 pm - 4:30 pm)

(Brought to you by Highlands Prosperity Parntership)

Lakeland - November 12 (9 am - 12 pm)

(Brought to you by Florida Prosperity Partnership Central Florida)

Miami - November 17 (9:30 am - 12:30 pm)

(Brought to you by United Way of Miami-Dade)

Manatee County – December (1 pm – 4 pm)

(Brought to you by RenewGlobal and Manatee Community Federal Credit Union)

Fort Myers - December 9 (9 am - 12 pm)

(Brought to you by United Way of Lee, Hendry, Glades, and Okeechobee)

Sarasota – December 10 (1:00 – 4:00)

(Brought to you by RenewGlobal and Manatee Community Federal Credit Union)

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R

EGIONAL

P

ROSPERITY

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OWN

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ALL

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EETINGS

Tallahassee - January 19 (tbd)

(Brought to you by Capital Area Community Action Agency, United Way of Big Bend,

and League of Southeastern Credit Unions Foundation)

Live Oak - January 20 (9 am - 12 pm)

(Brought to you by UF/IFAS)

Jacksonville - February 2 (10:30 – 2:00)

(Brought to you by Chase Bank and RealSense United Way of Northeast Florida)

Pensacola – February 3

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R

EGISTRATION

IS

F

REE

:

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June 1 – 3, 2016

at the beautiful

Portofino Bay Hotel

Universal Orlando

Room Rates Starting at $129 a Night!

WWW

.FPPC

ONFERENCE

.

COM

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Debt Management Credit Counseling Corp.

Presented By:

Phil Heinemann, Executive Director

AVOIDING THE PAYDAY LOAN DEBT TRAP

FPP Webinar

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 HUD Approved Multi-State Housing Counseling Agency

 U.S. Trustee Approved Bankruptcy Provider

 British Standards Institute ISO 9001:2008 Certified

 BBB of Southeast Florida (A+ Rating)

 Association of Credit Counseling Professionals

 National Association of Certified Credit Counselors

 National Industry Standards for Homeownership Education and

Counseling.

DMCC is a 501c3 nonprofit organization based in Lighthouse Point, FL.

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

Payday Lending in Florida



Florida’s Unique Regulations



Counseling Opportunities



DMCC Services

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PayDay Loan Usage

*

U.S.



State usage rates: 1% - 13%



Avg usage rate:

5.5%

Florida



Avg usage rate: 7.0%



Ranking (Tied 10

th

): Top 20%

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Loan Sources

Local Stores

 Licensed/Subject to FL Regulations

 Typically Repaid With Post-Dated Checks

Online

 Maybe Unlicensed/No Regulations

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What is the PayDay Loan Debt Trap?

 Borrower Unable to Repay Loan With Next Paycheck

 Borrower Obtains New Loan to Repay and Avoid Default

- Additional fees and potential collection costs from Lender

- Overdraft fees from Borrower’s bank if insufficient funds in account

 Cycle Continues Until Borrower has Funds to Repay

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Debt Trap Example

Loan Amount: $500

Pay Period: 14 Days

Loan Fee and Interest: $55 Cash Received: $445

If Borrower Requires 3 Months to Repay:

# of Rollovers: 6

Total Fees and Interest: $385 Total Cash Received: $445 Total Amount Owed: $830

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PayDay Lenders aka

“Deferred Presentment Providers”

Terms and Limits

 Maximum Loan: $500

 Loan Terms: 7-31 Days

 Maximum Fees: 10% of Check + $5 Fee

 Maximum # Loans: One

 Rollovers: Not Permitted

 Cooling-off Period: 24 Hours

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Florida Payday Loan Fee Schedule and APR

Loan fees equal a flat, non-refundable fee of $5.00 per loan, plus $10.00 per $100.00 borrowed. Payable in-full on next Payday.

$100 $200 $300 $400 $500

Term In Days Finance Charge / APR

7 $15.00 $25.00 $35.00 $45.00 $55.00 782.14% 651.79% 608.33% 586.61% 573.57% 8 $15.00 $25.00 $35.00 $45.00 $55.00 684.38% 570.31% 532.29% 513.28% 501.88% 9 $15.00 $25.00 $35.00 $45.00 $55.00 608.33% 506.94% 473.15% 456.25% 446.11% 10 $15.00 $25.00 $35.00 $45.00 $55.00 547.50% 456.25% 425.83% 410.63% 401.50% 11 $15.00 $25.00 $35.00 $45.00 $55.00 497.73% 414.77% 387.12% 373.30% 365.00% 12 $15.00 $25.00 $35.00 $45.00 $55.00 456.25% 380.21% 354.86% 342.19% 334.58% 13 $15.00 $25.00 $35.00 $45.00 $55.00 421.15% 350.96% 327.56% 315.87% 308.85% 14 $15.00 $25.00 $35.00 $45.00 $55.00 391.07% 325.89% 304.17% 293.30% 286.79% 15 $15.00 $25.00 $35.00 $45.00 $55.00 365.00% 304.17% 283.89% 273.75% 267.67%

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Florida’s Unique 60-Day Grace Period

 Borrower Must Notify Lender On or Before Due Date

 Lender Not Allowed to Charge Additional Interest or Fees

 Borrower Must Obtain Credit Counseling From an

Approved Agency:

- Provide Lender Proof of Appointment Within 7 Days - Complete Counseling Session Within 60 Days

 Borrower Must Repay Loan After 60 Days

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Best Advice…Avoidance!



Budgeting Emergency Savings

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Loan Options and Alternatives

 Secured Credit Card

- May Require Preliminary Budgeting - Builds Credit

 Credit Union Products

- Example: PriorityOne Credit Union EZ Cash Loan

 401k Loan (If Available)

- Typically Low Interest Rate - Interest Paid to Borrower

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PriorityOne Credit Union EZ Cash Loan*

$500 to $1,500 Loans for Qualified Members

 Minimum 2 Years With Current Employer

 Repaid in 6 Months via Payroll Deductions

 All Credit Union Accounts in Good Standing

 1st_{Loan Limited to $500}

 No Credit Check

 $25 Processing Fee

 Interest at 18% APR

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IF You Must…Protect Yourself!

 Borrow Only What You Can Afford to Pay Back

 Verify Business is Licensed

- Florida Office of Financial Regulation

 Beware of Lenders Who Only Request Your Bank Acct #

- Scam Alert!

 Be Wary of Online Lenders

- Many Unlicensed and Offshore; Difficult to Resolve Problems - Typically Higher Fees and Interest Rates

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 Florida Office of Financial Regulation

www.flofr.com Tel 850-487-9687

 Consumer Financial Protection Bureau

www.consumerfinance.gov/complaint/

 DMCC

www.dmcconline.org Tel 866-724-3328

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PayDay Loan Repayment

 60-Day Deferment Letter ($25)

 Budget Review and Recommendations

 Debt Management Plan (State Reg. Fees)

 ACH Revocation Letter (If Needed)

Free Educational Materials

 Budgeting Handbooks

 Online Financial Literacy Course

“Debt, Money & Credit Concepts” education.dmcccorp.org

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Debt Management Plans

 State Regulated Fees

- One-time Setup Fee ($50 Allowed less $25 Letter fee, if paid) - Monthly Fees (Typically $10 per loan vs. $35 Allowed)

 12 Equal Monthly Payments

- Considered “reasonable” by most lenders

 Amount Owed at Time of Plan Acceptance

- No additional lender fees or interest added

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3310 N. Federal Highway Lighthouse Point, FL 33064 Tel: 866-724-3328 www.dmcconline.org Cell: 954-415-8366 Email: [email protected]

Approved Agency:

www.flofr.com

www.consumerfinance.gov/complaint/

www.dmcconline.org

education.dmcccorp.org