Program helps people break free of payday loan cycle

Panel participants — from left, Brenda Guilfoyle, Topeka Emergency Assistance Center manager; Sasheen Cutchlow, Kansas Loan Pool Project supervisor; Thomas Green, KLPP participant; and Jeanette Pryor, legislative assistant for Kansas Catholic Conference — take part in a discussion about payday loans. LEAVEN PHOTO BY CAROLINE KABERLINE

by Caroline Kaberline
Special to The Leaven

TOPEKA — The statistics are staggering: 70 million people in this country are currently unbanked, unbankable or unhappily banked. These people are locked out of traditional financial services and often turn to predatory lenders such as payday and title loan companies — of which there are now more than McDonalds and Starbucks combined — so they can cover ordinary bills. Their use amounts to some $89 billion a year.

Often, when the cycle of using payday and title loans begins, it continues and leaves no way out due to mounting fees: In Kansas, the calculated annual percentage rate for a typical loan is 391 percent.

In fact, the users of payday loans often spend the same percent of their income on interest and fees as the typical family spends on groceries.

It is statistics such as these, as well as the increasing use of payday and title loans, that prompted Catholic Charities of Northeast Kansas to screen the dramatic film “Spent: Looking for Change” at the Topeka & Shawnee County Public Library this month.

The film follows four stories of individuals or families as they struggle to make ends meet. One is a college graduate struggling to pay student loans and start a business; two other storylines feature families struggling with mounting medical expenses. The final shares the struggles of an individual who made past credit mistakes and is finding it impossible to get a mortgage or other loans.

While many may believe payday loans are used only by people experiencing emergencies, statistics prove otherwise: 69 percent of these loans are used for recurring expenses like utilities, credit card payments, car payments, mortgage, rent and food.

Once these four individuals/families in the film begin using payday loans, the fees and exorbitant interest rates keep them renewing them, driving them even further into debt, as often happens in real life.

The family using a title loan ends up losing their car, as many real-life borrowers do.

While many people think that the scenarios featured in the film could never happen to them, said Jonathan Mintz, CEO for Financial Empowerment Fund, they should think again.

“The financially unstable are a picture of you and me, but for a couple of breaks,” he said.

Following the film, attendees broke into groups for discussion. This was followed by a panel discussion that introduced the Kansas Loan Pool Project (KLPP), a payday/title loan refinance program. Panel participants were Sasheen Cutchlow, KLPP supervisor; Tama Dutton, KLPP Topeka program specialist; Thomas Green, KLPP program participant; Brenda Guilfoyle, Topeka Emergency Assistance Center manager for Catholic Charities; and Jeanette Pryor, Kansas Catholic Conference legislative assistant.

The KLPP, offered by Catholic Charities in conjunction with Capital City Bank, provides a payday/title loan refinance program. This program gives participants a new, low-interest loan — currently 6 percent — that allows them to pay off their high-interest payday or title loan balances and get out from under their predatory lending policies.

To be eligible for this program, the total amount of payday or title loans must be no more than $1500; the participants must have a stable, traceable income; and their budgets must reflect the ability to make monthly loan payments.

In addition, they must submit to monthly case management for the duration of the loan and attend financial education courses.

“We act as financial coaches that help clients find the strength within themselves to solve their financial problems,” Dutton said. “We are banking case managers here to provide a hand up. We’ll help you see where you are at and support you as you discover your inner strength.”

Dutton encouraged those needing assistance to call the KLPP hotline number at (785) 233-0133.

“The phone is answered 24 hours a day, seven days a week, 365 days a year,” Dutton said. “If you leave a message, we will get back to you within four business days.”

Guilfoyle explained that Catholic Charities also offers a food pantry and emergency assistance for rent and utilities, so hopefully people won’t have to resort to predatory loans.

Green, a participant in the KLPP, explained that he was not prepared for a financial emergency and would have been paying on his payday loan “forever” without this program.

Now he expects to be debt free in a year.

Pryor told of working with legislators to advance laws changing Kansas’ permissive attitude toward payday and title loans.

Dutton also noted that the film and panel discussion will be presented again in the fall.

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