Attorney warns of payday loan ‘debt spiral’

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KANSAS CITY, Mo. -- For his family, Elliott Clark would do anything. But while trying to save all that he’s worked so hard for, he nearly lost everything.

“Almost lost my marriage, money causes programs and it causes arguments,” he said.

When Clark’s wife broke her ankle in 2003, she couldn’t work. His job wasn’t enough to pay all the bills. The Marine Corps veteran set aside his pride and borrowed money from payday loan businesses.

“If it’s too good to be true, it usually is. But when you’re in a bind, a situation that you can’t get out of, you grasp at straws to keep your head above water to try and survive,” Clark said.

He took out five short-term loans of $500 that would later amount to $50,000 in interest. Consumer Protection Attorney, Dale Irwin, called this “death spiral” a lucrative business.

“There are more payday loan offices in Missouri than there are McDonald's, Starbucks, and Wal-Marts combined,” he said.

Irwin’s been fighting for victims who fall into the payday loan trap because of his mother. She raised six children as a single mom who he said was always in debt to a loan company. Irwin used his student loan to pay off her loans.

“I have never lost my sense of outrage about it,” Irwin said. “How low do you have to be to take advantage of people in that situation? To line your pockets and to get rich off poverty.”

In 2008, Clark was finally able to pay off his loans and is now debt-free. Since then he’s been sharing his story so others won’t fall victim.

Clark will be speaking at the Moral Economy Summit at Rockhurst University. The two-day summit starts Wednesday, May 18th.

The Consumer Financial Protection Bureau will hold a forum on small dollar lending on June 2 at the Kansas City Convention Center. Those interested can RSVP at the event website.



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