Companies that make high-interest payday, auto-title and installment loans are filing more than 9,000 lawsuits annually against their customers in Missouri, according to a ProPublica analysis. A nationwide examination shows that the court system is often tipped in lenders’ favor, making lawsuits profitable for them while often dramatically increasing the cost of loans for borrowers.
High-cost loans already come with annual interest rates ranging from about 30 percent to 400 percent or more. In some states, after a suit results in a judgment — the typical outcome — the debt can continue to accrue at a high interest rate.
In Missouri, there are no limits at all on such rates. After a judgment, lenders can garnish borrowers’ wages or bank accounts in most states. In Missouri and other states, debtors who don’t appear in court also risk arrest. The St. Louis Post-Dispatch reported in 2012 that some Missourians had landed in jail after missing a hearing.
The growth of high-cost lending has sparked battles across the country, including Missouri. In response to efforts to limit interest rates or otherwise prevent a cycle of debt, lenders have fought back with campaigns of their own and by transforming their products.