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PROVO -- At the Crossroads Urban Center, people come in for food, bus tokens, diapers and other help. They also share stories of taking out payday loans.
"We had this feeling from the clients that were coming in, that something was not right," said Linda Hilton with the Coalition of Religious Communities. According to payday lending companies, 90 percent of all loans are paid back within a two week period, Hilton said. "But our experience here is that most people are in debt for months and months."
A new report by the Coalition of Religious Communities says that payday loan collections and claims make up 37 percent of all cases in Utah's justice courts. Hilton said it is as high as 80 percent in Provo, mostly because of one large company -- Check City -- that mandates in their contract that all prosecutions take place in Provo, which is where the company's headquarters are located.
Because most of them go to default, they process pretty quickly.
–Reannun Newton
But Reannun Newton, Provo City Justice Court administrator, said it is not something that is clogging up their court system.
"Because most of them go to default, they process pretty quickly," she said, explaining that in a typical day, the court has approximately 300 payday loan cases, but only 10 people show at the court to contest it.
Newton added that the number of prosecutions for unpaid loans is not a burden on taxpayers. "It is a lot of cases, but anyone who files a small claim has to pay a filing fee."
The filing fees, Newton said, were set by the legislature to start at $65 across the state.
However, Hilton said payday loans are getting out of control: "We went to court one day, and in 35 minutes, they looked at almost 800 cases. When you look at $65 per case, that's a real cash cow."
Representative Brad Daw of the Provo-Orem area said he is studying what other states are doing. And while he doesn't want to stifle business, he said it's worth looking at whether a database should be created to allow only one loan per person per paycheck.
Hilton plans to take the coalition's report to lawmakers before next year's legislative session.
E-mail: mrichards@ksl.com
