Judge allows thousands to join child support lawsuit, By Bill Rankin, January 3, 2012, Atlanta Journal-Constitution: “Thousands of parents facing possible jail time for failing to pay child support can join a lawsuit that says lawyers should be appointed to represent them if unable to afford counsel, a judge has ruled. In a Dec. 30 order, Fulton County Superior Court Judge Jerry Baxter granted class-action status to a suit filed last year against the state by five parents who had been jailed for child-support debt. Georgia is one of the few states nationwide that does not provide lawyers for indigent parents facing civil contempt in child-support proceedings. The state already struggles, because of budget shortfalls, to provide lawyers to indigent people charged with criminal offenses. The lawsuit contends Georgia is creating modern-day debtor’s prisons for those jailed when they have no ability to pay because they have lost jobs or are disabled and unable to find work…”

Businesses penalized for state unemployment insurance debt, By Pamela M. Prah, November 18, 2011, Stateline.org: “Employers in 20 states will have to shell out more in taxes next year as a penalty for the states not paying back federal loans that kept unemployment programs afloat during the recession. Altogether, states still owe $37.6 billion to the feds that they borrowed when their unemployment insurance trust funds sank to zero. Most states have dealt with the problem by raising state payroll taxes on employers, making benefits to workers less generous; or a combination of the two. A handful, though, have opted to issue bonds. Idaho did it earlier this year, and Texas did it last year. And just this month, Illinois lawmakers approved legislation allowing the state to issue bonds to pay back the $2 billion the state owes the federal government for unemployment relief. Governor Pat Quinn has applauded the UI package and has indicated he will sign the measure. The state figures it will get an interest rate lower than the 4 percent it would have to pay the federal government, saving the state and businesses millions of dollars…”

• Census data show wealth of older Americans is 47 times that of young adults, widest gap ever, Associated Press, November 7, 2011, Washington Post: “The wealth gap between younger and older Americans has stretched to the widest on record, worsened by a prolonged economic downturn that has wiped out job opportunities for young adults and saddled them with housing and college debt. The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data released Monday. While people typically accumulate assets as they age, this wealth gap is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago, after adjusting for inflation…”
• Why the wealth gap between young and old is wider than ever, By Mark Trumbull, November 7, 2011, Christian Science Monitor: “The wealth divide between older and younger Americans has widened sharply in recent years - because of both the deep recession and longer-term trends. That’s the conclusion of a new analysis released by the Pew Research Center, which looked at an array of government numbers to reach its conclusions. In all, the typical household headed by someone younger than 35 has seen its net worth fall by 68 percent between 1984 and 2009, after adjusting for inflation, according to the Pew report released Monday. Those in the 35-to-44 age group also saw a decline in net worth over that period, a drop of 44 percent…”

• A vicious cycle in the used-car business, By Ken Bensinger, October 30, 2011, Los Angeles Times: “Tiffany Lee wanted a car. She was weary of the two-hour bus ride to her job at a UCLA Health System clinic. She hated having to ask friends to drive her 7-year-old son to his asthma treatments. But as a single mother with three children, bad credit and a $27,000-a-year salary, she couldn’t find a bank or dealership willing to give her a loan. Then a friend steered her to Repossess Auto Sales in Hawthorne. Another buyer might have balked at the deal she was offered. Lee figured she had no choice. She put $3,000 down and drove off in a 2007 Ford Fusion, agreeing to pay $387 a month for four years. The interest rate: 20.7%, nearly triple the national average for a used-car loan…”
• Investors place big bets on Buy Here Pay Here used-car dealers, By Ken Bensinger, November 1, 2011, Los Angeles Times: “The J.D. Byrider used-car dealership in Visalia, Calif., sits amid a jumble of tow yards, hubcap vendors and vacant lots littered with empty beer cans. It may not look like much, but selling aging cars to waitresses, secretaries and farmworkers is a lucrative business. That’s why private equity firm Altamont Capital Partners of Palo Alto bought the J.D. Byrider chain in May for a reported $50 million. Altamont’s offices, on the 10th floor of a luxury office tower overlooking Stanford University, are 200 miles and a world away from the Visalia lot. On a recent morning, a dozen executives could be seen huddled in a glass-walled conference room, reviewing a slide presentation on plans to buy some franchised Byrider lots. It’s part of a strategy to boost profit at the 135-lot chain, which had sales of $740 million last year…”
• A hard road for the poor in need of cars, By Ken Bensinger, November 3, 2011, Los Angeles Times: “No car, no work. That’s the conclusion Lisa Twombly reached as she fought to hang on to her job as a caretaker for an elderly San Diego couple. Taking the bus and bumming rides from friends wasn’t cutting it, and she was repeatedly late for work. Told she’d be fired if it happened again, Twombly put down $4,000 - all her savings - on a 9-year-old Chrysler Sebring with 95,000 miles. The dealership lent her the $2,600 balance at a steep 18% interest rate. A few months later, the Sebring broke down and she got into a dispute with the dealer over who should pay for repairs. Twombly quit making loan payments, and Dig’s Wheels of Escondido, Calif., repossessed the car. She again struggled to get to work on time and was fired. That set off a chain of events that left the 38-year-old single mother and her two children homeless for six weeks. ‘I don’t know what I’m going to do,’ said Twombly, who is still out of work. ‘I lost my job because I lost my car.’ For more than a century, efforts to help the disadvantaged have focused on education, healthcare, nutrition and housing. Almost nothing has been done to help the working poor afford cars, despite research that indicates it would help alleviate poverty…”

Consumed by payday loans: State legislators offer haven for lenders deemed ‘predatory’, By Karen de Sá, October 30, 2011, San Jose Mercury News: “Facing government crackdowns around the country, payday lenders are thriving in lightly regulated California, where they lure hundreds of thousands of desperate borrowers a year despite punishing, triple-digit interest rates. Seventeen states and the U.S. military have effectively banned payday loans, which attract low-income borrowers who need a cash advance on paychecks. Georgia has declared payday lending to be felony racketeering. But in California, payday storefronts outnumber Starbucks coffeehouses. Neon-splashed businesses touting slogans like ‘Cash as Easy as 1, 2, 3!’ promise hassle-free, short-term loans, while few borrowers heed the fine print: A two-week loan will saddle them with what amounts to an annual interest rate of 460 percent. Now, the multibillion-dollar industry is looking for more help from a state Legislature that has protected payday lenders for years…”

Low-income borrowers get options beyond payday loans, By Christine Dugas, September 29, 2011, USA Today: “As more and more Americans rely on costly, non-traditional ways to borrow money, companies are starting to step up to provide safer, more affordable financial tools. Some 9 million families don’t have a bank account. And many of those who do have an account still consider themselves financially frail. Almost half of all households say they wouldn’t be able to come up with funds to deal with a financial shock of $2,000, says Annamaria Lusardi at George Washington University School of Business…”

‘Charity’ care, bad debt rise for Iowa hospitals, By Rod Boshart, August 2, 2011, Cedar Rapids Gazette: “The prolonged U.S. economic downturn has contributed to a rise in the level of uncompensated ‘charity care’ and unpaid medical debts that Iowa hospitals have incurred in recent years, officials said Tuesday. Overall, the 118-member Iowa Hospital Association provided more than $850 million worth of care last year for which the facilities were not fully compensated, association spokesman Scott McIntyre said. That level, based on a member survey, was up $54 million, or 6.8 percent, from 2009. The total stood at $252 million in 2000, he said…”

The bad - and good - news on microcredit, By Gregory M. Lamb, June 9, 2011, Christian Science Monitor: “First Muhammad Yunus founded the nonprofit Grameen Bank, which lent tiny amounts of money to poor people to start businesses. It appeared to be a revolutionary success and he received the Nobel Peace Prize for his work in 2006. In 2009, for example, Grameen had 6.4 million active borrowers with an average loan size of $127. Then came the second guessing. For-profit companies got into the micro-loan business charging high interest rates in order to generate an attractive return for their investors. While nearly all of Grameen’s borrowers repaid their loans in full, other lenders didn’t do so well. Borrowers began to default. Pressured by their creditors, some in India even committed suicide when they couldn’t repay their loans…”

First-ever data shows 25,000 car title loans worth $21M issued in last 3 months of 2010 in Va, By Dena Potter (AP), Washington Post: “Virginia car title lenders doled out nearly 25,000 loans worth more than $21 million in the last three months of 2010, according to data collected for the first time since the state started regulating the lenders. Car title lenders were unregulated in Virginia until October, when a new law took effect that limited how much the companies can charge, how much they can lend and for how long. Despite the protections, more than 3,500 borrowers missed payments for at least 60 days during those three months, and nearly 200 had their vehicles repossessed. Meanwhile, the new State Corporation Commission data shows that laws enacted in 2008 to curb the repeated use of their close cousin, payday loans, have dramatically reduced their use. Both are short-term loans that charge borrowers triple-digit interest rates. Payday loans hold a paycheck as collateral for a loan, whereas a car title loan uses a vehicle…”

Money counts: Young adults and financial literacy, series homepage, May 20, 2011, National Public Radio.

• Microfinance struggles to restore its reputation, By Erika Kinetz (AP), March 7, 2011, Boston Globe: “Long heralded as a way to lift the downtrodden out of poverty, microfinance is under a cloud. The stories of lives being changed by a $27 microloan and picture perfect scenes of smiling women with colorful handlooms, empowered by affordable credit, have been replaced by headlines about borrowers driven to suicide. At best, microfinance seems to be failing to achieve its most noble goal: poverty alleviation. At worst, some lenders are contributing to a cycle of indebtedness and abuse, just like the loan sharks they sought to replace. Critics say the industry has grown too quickly for its own good, with too much rapaciousness and too little regulation. That has fostered a breakdown in lending discipline, with multiple loans to overextended borrowers, and allowed some unscrupulous players to thrive…”
• India’s poor need help to help themselves, By Sarika Bansal, March 7, 2011, The Guardian: “Until recently, microfinance has been the golden child of international development. Microfinance companies would lend small amounts of money to poor women who would, in the ideal scenario, use them to start small businesses. Their interest rates were typically lower than loan sharks’ but still high enough to make a profit. Around the world, development experts believed microfinance was an ideal way to alleviate poverty, a smart way to ‘do good’ while also ‘doing well’. How times have changed. In the last few months, many people have become newly critical. In November, politicians in the southern Indian state of Andhra Pradesh started making bold claims about how microfinance’s crushing interest rates and strongman tactics were, among other things, leading to suicide among over-indebted borrowers…”

As unemployment insurance debts mount, interest payments loom, By Pamela M. Prah, February 16, 2011, Stateline.org: “For more than two years, stubbornly high unemployment has been taking a toll on the nation’s workforce, but for states, the mounting costs of paying benefits to millions of people who can’t find work are only beginning to become clear. Come this fall, some 30 states will be on the hook for paying $1.3 billion to the federal government for loans they took out to keep sending unemployment checks to workers who’ve lost their jobs. And that’s just the interest. In total, states owe the feds more than $42 billion, a tab they hope will evaporate on its own as the economy improves but will require decreasing benefits or raising taxes on businesses if it doesn’t…”

Obama plans to rescue states with debt burdens, By Michael Cooper and Sheryl Gay Stolberg, February 8, 2011, New York Times: “President Obama is proposing to ride to the rescue of states that have borrowed billions of dollars from the federal government to continue paying unemployment benefits during the economic downturn. His plan would give the states a two-year breather before automatic tax increases would hit employers, and before states would have to start paying interest on the loans. The proposal, which administration officials said would be included in the 2012 budget that the president is scheduled to unveil next week, was greeted coolly by Republicans on Capitol Hill, who warned that the plan would ultimately force many states to raise their unemployment taxes in the years to come. But the White House is calculating that the proposal will ultimately appeal to Republicans because it involves a tax moratorium right now for hard-hit states during a still-fragile economic recovery…”

States will soon have to start paying interest on their massive unemployment borrowing, By Olga Pierce, January 14, 2011, ProPublica: “Sometimes it’s time to pay the piper. And sometimes that piper is the federal government. And sometimes the piper wants more than $1 billion. Soon. Because of the high jobless rate and past fiscal irresponsibility, 30 states have collectively had to borrow more than $40 billion from the federal government just to keep unemployment insurance checks in the mail. A provision in the stimulus bill made those loans interest-free for an extended grace period. But no more. Efforts to include an extension of the grace period in Obama’s tax cut extension enacted at the end of last year failed, and the first batch of 14 states will have to start paying interest before the end of this year. Given that state budgets need to be hammered out in advance, that means state legislatures will soon face tough choices as they come back in session…”

For poor, bail system can be an obstacle to freedom, By John Eligon, January 9, 2011, New York Times: “Before George Zouvelos agrees to post someone’s bail, a customer must put up cash, sign a 20-page contract and initial 86 separate paragraphs. Those paragraphs are chock-full of fees: $250 if the defendant misses a weekly check-in; as much as $375 an hour for obscure tasks like bail consulting and research; and unspecified amounts if Mr. Zouvelos, a bail bondsman based in Manhattan, farms out tasks like obtaining court documents or delivering release papers to jail. Then there are the thousands of dollars that Mr. Zouvelos can charge if he decides to revoke a bond and return a defendant to jail, as he did 89 times during a four-month period last year. The common perception of how the bail-bond system operates is fairly straightforward: A bondsman bails a defendant out of jail. If that defendant misses a court appearance, the bondsman can ’surrender’ him - chase him down and haul him back to jail. The reality is more troubling…”

Microlenders, honored with Nobel, are struggling, By Vikas Bajaj, January 5, 2011, New York Times: “Microcredit is losing its halo in many developing countries. Microcredit was once extolled by world leaders like Bill Clinton and Tony Blair as a powerful tool that could help eliminate poverty, through loans as small as $50 to cowherds, basket weavers and other poor people for starting or expanding businesses. But now microloans have met with political hostility in Bangladesh, India, Nicaragua and other developing countries. In December, the prime minister of Bangladesh, Sheik Hasina Wazed - who had championed microloans alongside Mr. Clinton at talks in Washington in 1997, while Mr. Clinton was president - turned her back on them. She said microlenders were ’sucking blood from the poor in the name of poverty alleviation,’ and she ordered an investigation into Grameen Bank, which had pioneered microcredit and which, along with its founder, was awarded the Nobel Peace Prize in 2006. In India, until recently home to the world’s fastest-growing microcredit businesses, lending has slowed sharply since the state with the most microloans adopted a strict law restricting lending. In Nicaragua, Pakistan and Bolivia, activists and politicians have urged borrowers not to repay their loans…”

State debt for jobless benefits looming, By Catherine Candisky, December 19, 2010, Columbus Dispatch: “Although the battle over extending unemployment benefits has been solved in Washington, Ohio still has no way to repay the $2.3 billion borrowed from a federal loan fund to continue the jobless benefits through the recession. Without a reprieve from Congress, that bill comes due next year, at the same time state leaders will be grappling to close a projected $8 billion shortfall in the two-year state budget that begins in July. Given the budget crisis in Ohio and other states, many are hoping the due date for repayments will be extended again or the loan wiped out altogether…”

Mounting debts by states stoke fears of crisis, By Michael Cooper and Mary Williams Walsh, December 4, 2010, New York Times: “The State of Illinois is still paying off billions in bills that it got from schools and social service providers last year. Arizona recently stopped paying for certain organ transplants for people in its Medicaid program. States are releasing prisoners early, more to cut expenses than to reward good behavior. And in Newark, the city laid off 13 percent of its police officers last week. While next year could be even worse, there are bigger, longer-term risks, financial analysts say. Their fear is that even when the economy recovers, the shortfalls will not disappear, because many state and local governments have so much debt - several trillion dollars’ worth, with much of it off the books and largely hidden from view - that it could overwhelm them in the next few years…”

In India, greed creeps into microlending, critics say, By Rama Lakshmi, October 30, 2010, Washington Post: “The microcredit revolution has been celebrated for helping poor women in developing countries start small businesses. By borrowing money for purchases such as a buffalo or sewing machine, the women were able to help lift their families out of poverty. But critics say the microcredit model has been perverted by commercial greed in India, with reports of abusive collection methods and sky-high interest rates…”

In Illinois, late payments fray the safety net, By Daniel C. Vock, October 19, 2010, Stateline.org: “On weekday afternoons when schools let out in Humboldt Park, a predominantly Puerto Rican neighborhood on Chicago’s West Side, dozens of children, ages 6 to 16, head to a community center known as the Youth Service Project. When they arrive at the center’s activity rooms, the children must do their homework first. Then they’re allowed to play, read books about sharks, throw balls at each other or just hang out with friends. It’s a safe place in a neighborhood troubled by gang violence. Two years ago, two participants at the Youth Service Project were killed, and two more were injured, in the fighting. The youth at the center, which runs an arts education program, responded to the deaths by painting an indoor mural of their memories of that summer’s events. It shows a SWAT team van, a church cross against a blue sky and a funeral home - although the center’s staff, fearing that the funeral home would be a distressing image for the kids to see every day, have moved a bookshelf in front of it. The center plays an important role in the life of Humboldt Park. Indeed, the state of Illinois, which provides 95 percent of the Youth Service Project’s funding, expects the center to provide all of the services under its contract. The catch is that, with all the state’s fiscal troubles lately, no one knows when the state will actually hand over that money…”

• Some schools teach financial literacy, but courses still in short supply, By Karyn Saemann, June 3, 2010, Capital Times: “It’s ‘payday’ in Jill Strand’s classroom at Glacier Edge Elementary School in Verona. Strand’s third-graders rush toward plastic bins crammed with parent-donated school supplies and trinkets, eager to cash the weekly mock paychecks issued by Strand for classroom jobs like collecting library books and checking desks for tidiness. ‘They don’t understand how much they’re really learning,’ says Strand. ‘They see it as fun, free-choice time.’ But in a sign that a deeper financial message is resonating, not all students are quick to part with the hard-earned classroom currency the paychecks are exchanged for. Kate Veak tucks her ‘Strand Bucks’ away, saying she is saving for something bigger, like a hardcover book. Strand recently chronicled her lessons in savings and investing in ‘Financial Literacy: TEACH IT!,’ a series of online teacher vignettes compiled by the Wisconsin Educational Communications Board, which won a 2010 award from the Governor’s Council on Financial Literacy for the project. Strand says she may soon introduce her third-graders to the concept of sales tax and is considering letting them borrow from their classroom bank, potentially leading to discussions about credit card interest and maybe even payday loans. It’s not something you used to see kids learning at school…”
• We’re flunking personal finance, By Michelle Singletary, May 9, 2010, Washington Post: “The financial teaching grade is in for teachers — and it’s not good. Researchers at the University of Wisconsin at Madison surveyed K-12 educators, and, not surprisingly — or at least it wasn’t a shocker for me — most instructors don’t think they are suitably trained to teach their students the basics of personal finance. The study, ‘Teachers’ Background & Capacity to Teach Personal Finance,’ was funded by the National Endowment for Financial Education (NEFE). The teachers were asked to assess their instructional competency in six personal finance areas: income and careers; planning and money management; credit and debt; financial responsibility and decision-making; saving and investing; and risk management and insurance. Less than 20 percent of the surveyed educators felt they were ‘very competent’ in any of the six areas. No wonder: Barely one-third of them had taken a college course that included personal finance content, the researchers found…”

State debt woes grow too big to camouflage, By Mary Williams Walsh, March 29, 2010, New York Times: “California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink - budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay. And states are responding in sometimes desperate ways, raising concerns that they, too, could face a debt crisis…”

In hard times, lured into trade school and debt, By Peter S. Goodman, March 13, 2010, New York Times: “One fast-growing American industry has become a conspicuous beneficiary of the recession: for-profit colleges and trade schools. At institutions that train students for careers in areas like health care, computers and food service, enrollments are soaring as people anxious about weak job prospects borrow aggressively to pay tuition that can exceed $30,000 a year. But the profits have come at substantial taxpayer expense while often delivering dubious benefits to students, according to academics and advocates for greater oversight of financial aid. Critics say many schools exaggerate the value of their degree programs, selling young people on dreams of middle-class wages while setting them up for default on untenable debts, low-wage work and a struggle to avoid poverty. And the schools are harvesting growing federal student aid dollars, including Pell grants awarded to low-income students…”

Microfinance’s midlife crisis, By Julian Evans, March 1, 2010, Wall Street Journal: “From humble beginnings, microfinance-a system of providing tiny loans and savings accounts to the poor-has grown into a global industry attracting the interest of large multinational banks. But the commercialization of the industry has sparked a fierce debate. Profit advocates highlight improved access to foreign capital and expertise; traditionalists say microfinance companies are in danger of becoming little better than predatory moneylenders. There is little doubt that microfinance is now big money. In 2008 it attracted $14.8 billion in foreign capital, up 24% from the previous year. For the first time, the majority of the money came from private investors-including pension schemes and private-equity funds-rather than governments, according to the World Bank…”

• Payday lenders giving advances on unemployment checks, By Robert Faturechi, March 1, 2010, Los Angeles Times: “The payday loan industry has found a new and lucrative source of business: the unemployed. Payday lenders, which typically provide workers with cash advances on their paychecks, are offering the same service to those covered by unemployment insurance. No job? No problem. A typical unemployed Californian receiving $300 a week in benefits can walk into one of hundreds of storefront operations statewide and walk out with $255 well before that government check arrives — for a $45 fee. Annualized, that’s an interest rate of 459%. Critics of the practice, which has grown as the jobless rate has increased, say these pricey loans are sending the unemployed into a cycle of debt from which it will be tough to emerge. Many payday clients pay off their loans and immediately take out another, or borrow from a second lender to pay off the first, and sink ever deeper into debt. Typical customers take out such loans about 10 times a year, by some estimates…”
• Online payday loans pose new challenges for consumers, regulators, By Pat Schneider, February 22, 2010, Capital Times: “Bonnie Bernhardt is proud to have helped nearly 400 Wisconsin residents get back some of their money from an online lender that state attorneys say overstepped its bounds. The 43-year-old single mother from Verona was the lead plaintiff in a lawsuit filed two years ago against online payday lender Arrowhead Investments. After an out-of-court settlement to the class action lawsuit was approved earlier this month, Bernhardt and the others will split $100,000 in restitution. Another $432,000 in outstanding loans will be closed out and forgiven by Arrowhead, and the Delaware-based company is also barred from doing business in Wisconsin for five years…”

• Bill aims to help borrowers break cycle, By Cathy McKitrick, January 8, 2010, Salt Lake Tribune: “At his own insurance agency, Rep. Jim Dunnigan, R-Taylorsville, got a first-hand look at the tactics some payday lenders use to attempt to collect debts at a borrower’s workplace. ‘It got my attention,’ Dunnigan said of the multiple calls to one of his employees — even after Dunnigan had asked them to stop. The lawmaker crafted HB15 to restrict that practice and also to extend a hand to folks who are drowning in debt. His bill, backed by the Legislature’s Business and Labor Committee, would limit loan rollovers to 10 weeks instead of 12. It also would allow borrowers to request extended payment plans to get a handle on their debt. Supporters of the effort, including an industry association, praise HB15 as what could be a significant improvement over current law. But critics denounce it as window dressing…”
• Poor fall victim to loan sharks over Christmas spending, January 15, 2010, BBC News: “Some of the UK’s poorest people are starting the new year in severe debt after borrowing from loan sharks to pay for Christmas, a report has said. The Financial Inclusion Centre said 100,000 families had borrowed a total of £29m from illegal moneylenders. The think tank said on average it would take a year to pay the money back as lenders recouped three times the value, with some interest rates up to 1,500%. The average amount borrowed was £288, but the average repayment was £820…”

New payday lending law takes effect in Wash. state, By Manuel Valdes (AP), December 31, 2009, Washington Post: “After a new law imposing stricter regulations on the payday lending industry takes effect Jan. 1, Ken Weaver is not optimistic his two check-cashing stores in eastern Washington will remain open. The new law limits the size of a payday loan to 30 percent of a person’s monthly income, or $700, whichever is less. It also bars people from having multiple loans from different lenders, limits the number of loans a person can take out to eight per 12 months, and sets up a database to track the number of loans taken out by people…”

A better way for payday loans, By Anne Stuhldreher, December 21, 2009, Los Angeles Times: “It’s a cycle that seems to repeat itself every legislative session in California. Advocates put forward a bill to curb the predatory practices of payday lenders. Then industry lobbyists squelch the effort, convincing state lawmakers that they’re the lenders of last resort, the only ones who haven’t abandoned low-income neighborhoods. Never mind that the lenders’ generosity comes with quick and costly paybacks — a blizzard of fees that can add up to an annualized interest rate of more than 400%. Indeed, the average borrower ends up borrowing again — and again — trying to pay back that first $300 payday loan, shelling out a shocking $800 for the privilege, according to the Center for Responsible Lending. But there’s finally been a break in the pattern. Last week, San Francisco unveiled a program that communities throughout the state would be wise to follow. It will be the first city in the nation to partner with local financial institutions to market an alternative to the pricey payday loans that are sending too many borrowers into economic spirals…”

Michigan rules derail child support payments, By Catherine Jun, December 7, 2009, Detroit News: “Scores of Michigan parents have fallen behind on their child support payments, and state regulations prevent some from ever catching up. A large percentage of the debt is due to a surcharge the state began applying to delinquent payers in 1996, officials acknowledge. Though designed to encourage parents not to skip the payments, the surcharge has pushed some parents into such a deep hole they can’t climb out. About $9.2 billion in back child support is owed in Michigan, affecting more than 600,000 children. That’s about two-thirds of child support cases in the state. With state unemployment at 15 percent, courts and prosecutors that hunt down deadbeat dads are finding some fathers don’t have the money to pay. ‘Yeah, I have been falling behind,’ said Jeremy Deron, 38, of Westland, who was ordered to pay at least $5,000 in back payments by January. Deron, who lost his job a year and a half ago as a union bricklayer, said he regularly paid child support for his two sons until his unemployment checks ran out a few months ago. Now he faces a felony charge if he misses the January deadline. ‘I don’t have the five grand,’ he said. ‘Now I’m fighting to stay out of jail.’ Michigan ranks third among states with the highest amount of uncollected child support funds. The state surcharge is a key culprit, compounding the debt of delinquent payers by essentially adding interest onto overdue back payments, said Marilyn Stephen, director of the state Office of Child Support…”

Amid droughts and failed crops, a cycle of poverty worsens, By Mark Magnier, December 1, 2009, Los Angeles Times: “She stops for long stretches, lost in thought, trying to make sense of how she’s been left half a person. Sunita, 18, who requested that her family name not be used to preserve her chance of getting married, said her nightmare started in early 2007 after her father took a loan for her sister’s wedding. The local moneylender charged 60% annual interest. When the family was unable to make the exorbitant interest payments, she said, the moneylender forced himself on her, not once or twice but repeatedly over many months. ‘I used to cry a lot and became a living corpse,’ she said. Sunita’s allegations, which the moneylender denies, cast a harsh light on widespread abuses in rural India, where a highly bureaucratic banking system, corruption and widespread illiteracy allow unethical people with extra income to exploit poor villagers, activists say…”

• Unemployment tops 10 percent again _ and it’s tougher off the job than a generation ago, By Jeannine Aversa (AP), November 7, 2009, Chicago Tribune: “It hurts more to be unemployed now than the last time the jobless rate hit 10 percent. Americans have more than triple the debt they had in 1982, and less than half the savings. They spend 10 weeks longer off the job. And a bigger share of them have no health insurance, leaving them one medical emergency away from financial ruin. For these reasons, the unemployed are more vulnerable today to foreclosure and bankruptcy than they were a generation ago…”
• Debt levels leave low paid at risk of homelessness, By Nick Mathiason, November 11, 2009, The Guardian: “Britain’s 14.3 million low earners are in danger of being sucked into a whirlpool of poverty as official figures are expected to show today that the number of unemployed has passed through 2.5 million for the first time in 15 years. Research by the insurance tycoon Clive Cowdery’s thinktank, Resolution Foundation, shows low-income households - with an average of £15,800 at their disposal - are walking an increasingly precarious financial tightrope. It has found that 24% of low-wage households spend more than a quarter of their monthly income on debt - twice the number from three years ago. The study shows nearly a third of low-income households have high loan-to-value mortgages and are in negative equity, making them vulnerable to homelessness if they lose their job…”

Study finds lower earners use credit as safety net, Associated Press, July 28, 2009, New York Times: “Even before the recession hit full force, people who earn low and middle incomes were tapping credit cards to cover basic living expenses, medical costs and other necessities — and driving up their balances in the process.  The average credit card debt for low- and middle-income households rose 3 percent to $9,827 from $9,536 three years earlier, according to a study released Tuesday by the New York-based nonprofit research and advocacy group Demos. About 42 percent of those surveyed in August said they had more debt than three years earlier, while 10 percent said they had the same amount. Less than half reported having less debt than three years earlier, when the group did its prior survey.   Credit cards were used to cover basic living expenses like rent or mortgage payments, groceries and utilities by more than one-third of the households in the survey. And three out of four people who took part said they used their cards for essential spending like car repairs, home repairs and college expenses…”

Pakistan’s kiln workers bricked in by debt, By Pamela Constable, July 3, 2009, Washington Post: “At the end of a village road, behind a grassy bluff, lies a hidden valley carpeted with thick red dust and canyoned with craggy mounds of earth. At the bottom, clay-colored figures squat barefoot all day, shaping balls of mud into bricks. In the distance, a dozen scattered chimneys spew clouds of black smoke, which trail off prettily across the horizon…”