The Nashville Area Hispanic Chamber of Commerce is currying favor for a proposal in the state legislature that shields people from predatory lending tied to lawsuit payouts.
"Litigation lenders" offer advances to those who need help with medical or legal fees or other costs while awaiting a settlement. They are able to impose as much interest as they see fit -- unlike thrifts that are limited to 24 percent, credit card issuers that cannot charge more than 21 percent, and installment loans that are capped at 18 percent. "What happens to the consumer?" writes Nashville Area Hispanic Chamber of Commerce President and CEO Yuri Cunza in an opinion piece. "They may not only never see a penny from the legal settlement, they maybe have to sell a car or a house to pay back the lender -- if they even own a car or home."
The Tennessee Litigation Financing Consumer Protection Act, under consideration in the state House, would not prohibit lawsuit lending but would make sure that providers are subject to the same rules as other lenders in the state and ensure that they do not prey on state residents. The Tennessee Senate has already passed a companion bill, which would restrict lenders to collecting no more than $300 in fees per year, for up to three years, per $1,000 lent.