Victims of Payday Lending: Lisa Engelkins
Looking for a way out: Lisa Engelkins' story
Lisa Engelkins, 33
Occupation: temporary worker
35 rollovers of a single payday loan
Paid $1254 in fees
Took two years to repay the loan and get out of the debt trap
If your finances are in pretty good shape, the commercials are nothing but an annoyance. But before Lisa Engelkins wised up, every time a quick cash offer hit the airwaves, the possibility of a way out of money trouble was planted in her mind.
She was raising a five-year-old on her own in 1998, making less than $8 an hour and receiving virtually no child support. Her money was always short. Lisa found that she could not ignore those commercials or the payday lending stores that were popping up all over Winston-Salem.
"When I first started, I didn't even know that these payday loans were bad," said Lisa. "I was just glad I could find a way to get some money for myself so I didn't have to ask my parents. They had already helped me so much in the previous years, that I wanted to be able to find my own way."
So when Lisa found she needed cash before her next payday, she walked into an Urgent Money Service store. She started with a $60 loan. Before she knew it, she was borrowing $300. In a simple five-minute transaction, she wrote a post-dated check for $300, and walked out with $255 in cash.
Lisa's way out quickly became a path to big trouble. She got caught in a system that all too easily traps customers into repeated borrowing. Lisa put off the hardship of paying the money back by immediately taking out another loan in a back-to-back transaction, losing another $45 each flip.
"As soon as you get your first loan, you are trapped unless you know you will have the 300 extra dollars in the next two weeks," said Lisa. With no thought of interest rates and little understanding of the high price she was paying, Lisa took out 35 payday loans between August 1998 and January 2000.
"I spent over $1200 in fees for a $255 'revolving' cash loan," she said. "I was throwing away $90 in fees every month just to use the same $255 cash payday loan. And, worst of all, I had no idea how this trap worked until I was out from under it."
"I didn't even realize the payday-lending trap until my mother found out that this was how I was getting what I thought was extra money," said Lisa. "Once she explained to me how these places do more harm than good, I was almost relieved, because then I understood why I was more broke than I was before the payday loans; my bills were now further behind and I was stressed out."
Lisa took desperate measures to escape the trap. She went to her bank and withdrew all the money from her account, intentionally letting the Urgent Money check bounce.
"That was the only way I could see getting out at that time," she said. "I lost my checking account in the process, which was probably my saving grace, because at least I was no longer eligible for payday loans. It took me two years to finally pay that check off."
Lisa has come a long way since she escaped the debt trap. She now works for Consumer Credit Counseling Service of Forsyth County, and she courageously shares her story so that others will know that what payday lenders offer is false hope. As Lisa learned so painfully, this "way out" leads straight into a cruel trap.