Legal Aid fights loan scammers

Credit card debt and predatory lending don’t exactly sound like material for a riveting night at the movies. But on October 25, Legal Aid will host a film screening of Maxed Out, an exposé about the way credit card companies and high interest lenders do business. Apparently, the truth ain’t pretty.
    Directed by James Scurlock, Maxed Out has already gotten acclaim at several documentary film festivals. The film exposes America’s debtor culture and how the modern financial industry makes the rich get richer and the poor get poorer. John Grisham will MC the screening, and several local law firms and representatives from Virginia National Bank will be present. During a panel discussion following, a Legal Aid client will discuss how she fought her own predatory lending case.
    Legal Aid Director Alex Gulotta says his office handles many unfair lending cases. He also says Virginia’s laws are business-friendly but harsh on borrowers. “There are so many different ways that low- and moderate-income families get into really bad deals when credit is involved,” says Gulotta.
    For example, buying a car is the largest purchase many lower-income people will ever make, Gulotta says. “People are routinely sold cars for more than one-and-a-half or two times retail book value… In some places that would be an unfair trade practice, but it’s not actionable in Virginia,” he says. “The point is there are lots of poor people driving around Charlottesville paying 30 percent APR on their cars,” he added.
    Payday lenders are also a growing problem, Gulotta says: “Six or seven years ago there wasn’t a paycheck cashing loan place in Charlottesville. Drive around town now, how many do you see? …Part of the reason they’re here is because we don’t bother to regulate them.” Gulotta describes one case, which he calls “loan sharking,” in which a borrower took a $500 loan with 684.37 percent interest, or $75 per week. In Virginia, there is no absolute cap on interest rates.
    Even for people who aren’t living paycheck to paycheck, Maxed Out may hit close to home. It reveals how credit card companies obtain information, dirty up credit reports and intimidate people into paying—pertinent to anyone who’s ever received a “You’ve been pre-approved!” offer in the mail.
    Tickets for the benefit screening are $25 at the Paramount box office—credit cards accepted.

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