Jerry Kopel

Payback Loans


Jan. 7, 2008

By Jerry Kopel


Colorado media writers (including me) missed a mild pro-consumer HB 1261 in the 2007 legislature dealing with payday loans (also known by the sanitary title "deferred deposit loans"). The concept of HB 1261 is excellent, but it may be too loose in actual practice.

In a payday loan, you supposedly borrow money and pay it back at the next payday by way of a check held by the creditor, with a rather large fee for use of the original amount.

HB 1261 requires a debtor be offered a voluntary payment program on the debt stretching over six payments before a fourth consecutive payday loan is obtained. Bill sponsors. Rep. Debbie Benefield (D) and Sen. Lois Tochtrop (D), had obviously reached agreement in advance with enough of the payday lender organizations.

The bill was never amended and passed in a short time period, Feb. 21 through Feb. 27 in the House and March 8 through March 14 in the Senate. In practice, it will be easy for the lender to get around the end goal. Hopefully no promises were made against strengthening the concept in 2008.

Some states ban payday loans. Colorado does not. The statute can be found in Title 5, Article 3.1, in 23 sections. The maximum amount of the loan is $500 with a maximum payback of $575, and the maximum loan time is 40 days.

The law provides "a deferred deposit loan shall not be renewed more than once" although obviously there are ways to legally continue the roll-over of the debt with additional interest charged. It is called "touch and go" where you come in with the amount due and walk out with the "origination" of a new loan. It's not renewed. It's a new loan.

HB 1261 takes effect "at the time of origination of a fourth consecutive deferred deposit loan" allowing a consumer the option of paying "the debt, both principal and the fee in at least six equal payments" based on upcoming pay days.

The attorney general's office has now provided by rule "The lender shall provide the consumer with a copy of the notice of payment plan option in a form the consumer may keep." The six payment language that must be used is also provided by rule adopted by the attorney general's office.

The trouble with payday loans really should start at the second consecutive loan to "pay" the first loan. It might be a harder fight to win, but having the six payment option would likely reduce the likelihood of default than eventually leads to bankruptcy.

Not every state allows the high triple digit interest of payday loans. North Carolina, Georgia, Oregon, and the District of Columbia don't permit payday loans.

Arkansas, Connecticut, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Vermont, West Virginia, Puerto Rico and the Virgin Islands have small loan laws or usury caps that effectively prohibit the inducement of payday lending or triple-digit interest rates.

Whatever happens in 2008, with a Democratic majority, nothing ventured, nothing gained.

* * *
Hummers? It's a great tradition. But as of now it means nothing to most of the thirty plus new members of the legislature. The Hummers show has always been produced by the House minority party and presented during the final days of the May session.

Once in a while because of deadlines, a legislative session misses a Hummers show. But until this decade it was never canceled for reasons of anger.

Anger happens because of what happens DURING the session.

In 2003, the Democrats announced they were too exhausted and angry to be amusing. This was the year when revising congressional seats already once revised came into play near the end of the session. The Democratic show was going to be about "Tradition" with music and lyrics substituted from "Fiddler On the Roof".

In 2007, according to a Rocky Mountain News article "the minority GOP nixed coming up with a show after stinging criticism of last year's (2006) effort, when even fellow Republicans thought their effort bombed in part because it was so mean-spirited." That's another word for "anger".

It is time to think out of the box. While there have been some new persons added to the House for 2008, the makeup is basically the 2007 House again in session.

If the Hummers miss out in 2008, the tradition, now lasting close to 40 years, will definitely be broken.

In the 70s and 80s, the show tried to do too much. Usually put on in the morning, the scripts were too complicated, the costumes too elaborate, the props too numerous, the rehearsals endless. The longer the show, the less funny it became.

The Hummers got back on the track by centering the show around easy themes, such as Jeopardy, or funny sounding awards, often given right after lunch and never lasting longer than an hour.

Prizes and one-liners can be cruel, but not devastating. There is one I will always remember. One House member was told "to come down to the front and receive your award. Everyone says you are playing with half-a-deck" claimed the moderator, "so to make up for it, here is the other half" handing the legislator half-a-deck of giant playing cards.

Hummers in January 2008 might be a lot better that Hummers in May.

(Jerry Kopel served 22 years in the Colorado House, and usually played the piano during the Hummers sketches.)

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