Press Article: The Burden of Flex Loans in Tennessee – A Deepening Debt Crisis
Tonya Davis and Tessa Shearon are just two of the 110,000 Tennesseans who have faced lawsuits from Advance Financial since 2015, amidst the launch of its controversial Flex Loan product. Initially introduced as a solution for financially strapped consumers, these loans, with annual interest rates reaching up to 279.5%, have led many borrowers into deeper financial distress.
Rosita Hansen, a factory worker, found herself sued for $12,500 despite paying over $6,600 on a $2,050 loan. While she initially sought help to prevent mortgage foreclosure, the loan not only failed to alleviate her financial struggles but exacerbated them, ultimately costing her home.
Advance Financial’s lawsuits have surged since the Flex Loan’s introduction, making it one of Tennessee’s largest plaintiffs in debt collection. Legal leniencies allow the company to recover attorney fees, resulting in judgments exceeding $10,000 for many borrowers. The law enables the accumulation of staggering charges, with many cases leading to wage garnishment.
Consumer advocates warn that these loans disproportionately impact low-income individuals. Data shows that in certain counties, Advance has filed a lawsuit for nearly every 50 residents. With stringent legal frameworks favoring lenders, borrowers often struggle to find adequate legal representation, leading to default judgments in court.
Despite claiming to offer a cheaper alternative to traditional payday loans, the aftermath of Flex Loans reveals a system that entraps consumers in a cycle of debt. As litigation continues to escalate, financial experts assert that without caps on interest rates, thousands of Tennesseans could remain vulnerable.
In collaboration with ProPublica and the Tennessee Lookout, ongoing investigations aim to shed light on the implications of Flex Loans and the broader impact on Tennessee’s low-income populations.
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