December 7, 2019

Can Usurious Loans Violate the Thirteenth Amendment?

“I wonder: What would Timothy Howe, a Reconstruction-era congressman who opposed slavery, have made of the story of Raedell Piaso?

A few years ago, Piaso was making a little less than $23,000 a year as a receptionist in Albuquerque when she couldn’t make her rent for her apartment.

Facing eviction, she took out a loan. She signed over the title to her family’s 2004 Ford F-150 as collateral and agreed to an annual interest rate of 300 percent. She thought she could make it work by cutting back—from macaroni and cheese, say, to ramen noodles.

Her payment history shows her trying to keep up. Over 13 months, she gave more than a quarter of her take-home pay to the lender—$5,617—on a loan of $1,971. But the lender applied less than $2 of that to the loan principal; the rest vaporized in fees and interest.

She fell behind, and the lender threatened to seize her truck. She drove west and left it with her parents on the Navajo Reservation, where the lender couldn’t reach it. And after that, she took the bus to work.

Piaso is one of millions of low-income Americans who use high-cost loans to bridge the gap between stagnant wages and the cost of living, and who live months or years trying to pay off loans they cannot afford—and so remain in debt.”

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