Mr. Haak's Amazing Website of Wonderment and Illumination!



Business of last resortBy Dave Alexander | Muskegon Chronicle The Muskegon Chronicle 571550673000Published: Sunday, April 27, 2008, 12:38 AM ?As people get further behind paying their bills, they turn to places like cash advance and pawn shops. Chronicle/Kendra Stanley-MillsSeven years ago, Mandisa Bruce of Muskegon purchased a 1996 Oldsmobile Aurora for $11,831. Today, she is being sued for $16,711 by a Southfield "sub-prime" auto loan company although the vehicle, which had sat unused in her driveway for years, was stolen and left burnt-beyond-use in Muskegon Township in 2006."I knew I spent too much for it when I bought it," said Bruce. "But I had just gotten a job in Grand Rapids and I needed transportation. I had bad credit so I knew it wasn't going to be cheap, but I didn't have a choice. I couldn't take the (MATS) bus to my job in Grand Rapids."But to pay $16,000 for a car that was five years old at the time and had more than 100,000 miles on it doesn't seem fair."Such is the plight of the working poor who, because of lack of wages and good credit, are forced to work with those in the so-called "poverty business." Needing a quick fix, they often spiral deeper and deeper into debt.5715635000From pawn shops to rent-to-own outlets to pay-day advance companies and urban corner stores with high-priced groceries, the "poverty business" is flourishing in the country and throughout West Michigan as the economy worsens and gas prices rise.The Muskegon area has at least nine cash-advance outlets, four rent-to-own stores and four pawn shops that profit from charging high prices, fees or interest rates on the backs of people who have nowhere else to turn."People are in desperate situations when they walk in the doors of these businesses," said Tim Burgess, executive director of the Neighborhood Improvement Association, which works with low-income homebuyers in Muskegon."Some of what is done is legal and legit but evil," Burgess said. "They know they are taking advantage of those that are in need of real help."BusinessWeek magazine in a story last year on the "poverty business" reported that payday lending companies have grown from 300 in the early 1990s to more than 25,000 today, with five of them major corporations traded on the New York Stock Exchange or NASDAQ. The "alternative financial services" sector, which services people with no credit or bad credit, represents more than $250 billion a year in loans, the magazine reported.The question begs: Are businesses such as Golddiggers pawn shop on East Laketon or J.D. Byrider -- the national sub-prime auto king with an outlet in Muskegon -- serving the working poor who need quick access to cash, goods or cars or are they "preying" on their financial desperation?It depends on who you talk to.The woman who brought in a "mother's ring" to be pawned at Golddiggers on Monday was thankful for the $8 she received, though store owner Adam Pollock explained he couldn't pay more."I'll take it," said the woman, who asked not to be identified. "I need gas for my car."When people take goods to a pawn shop, they are putting an item up for collateral for a cash loan and given so many days to recover the item at a stiff interest rate -- 35 percent at Golddiggers. Some just want the cash and never return to pick up their pawned items.But Pollock said he is providing a service -- "I'm helping people get money so they can buy gas to go to work. You couldn't go to a bank and get a small loan of $100."Pollock said it is a myth that people like him are getting rich at the expense of the poor. He said he gave $116,000 in loans last year, but after paying rent, his two employees -- who he pays $10 or $11 an hour -- had a better income than he.Pay big, or do withoutMandisa Bruce, who also was housing her brother and his son, bought the Oldsmobile at MD Auto Sales, 5710 Holton with a "sub-prime" auto loan that was eventually sold to Automotive Credit Corp. of Southfield, Mich. Automotive Credit has been in the sub-prime auto loan business since 1992, purchasing loan contracts from independent dealers for "consumers with limited or challenged credit histories who are unable to obtain financing from traditional sources," according to the company Web site.The loan agreement was for $10,350 after Bruce put $1,500 down on the five-year-old car. The 36-month loan had a 25 percent interest rate -- the legal limit under Michigan's usury laws -- for a monthly payment of $411.51.That interest rate is typical for many local people seeking transportation, said MD Auto Manager Nick Davis."Due to the economy, our customer's credit is getting worse and worse," Davis said. "(Interest) rates go up when you have credit problems. It's like trying to get low insurance rates with two (drunk driving charges)."For many low-income auto buyers, the option is to pay 25 percent interest rates or go without a car, which often is critical to keeping a job. "The poor folks' goals extend to sunset," said Dan Bonner, the managing attorney for Legal Aid of Western Michigan in Muskegon and a 25-year veteran in providing legal services to the poor. "Their judgments don't take into account the benefits of deferred decisions."Poor people don't have the patience ... sometimes they just can't wait," said Bonner, who has accepted Bruce's case as Automotive Credit attempts to collect. "There's a lack of impulse control. That sometimes is for survival."57154000500When people take goods to a pawn shop, they put an item up for collateral for a cash loan, and are given a set number of days to recover the item at a stiff interest rate — 35 percent at Golddiggers.Chronicle/Kendra Stanley-MillsPrior to seeing Bonner, Bruce -- whose car would not run anymore and who had incurred other large debts -- filed for bankruptcy. But because she missed two Grand Rapids court appearances, her case was dismissed, providing her no protection from creditors.Bonner said that Automotive Credit left the Bruce case to linger, chalking up interest and penalties as time proceeded until finally filing suit in August of last year. Bonner wrote the Muskegon County 60th District Court: "This case seeks an amount from the defendant that exceeds (the total payoff with interest) by $2,000."The legal aid attorney told the court in answer to Automotive Credit's complaint that Bruce surrendered the uninsured vehicle to the auto loan company at the time she filed for bankruptcy but the company did not pick it up from her house. The vehicle eventually was stolen and left as a burned-out shell in Muskegon Township.Bruce's case is pending as dozens more mount throughout the area.Automotive Credit has brought more than 170 similar collection cases in Muskegon County courts since 1996. Sub-prime auto loan businesses argue that high-interest rates cover the cost of bad loans that are more frequent with lower-income customers.An endless cycleWhen those in the "poverty business" go beyond the limits of Michigan law, the state's Attorney General's Office steps in on behalf of consumers through its Consumer Protection Unit, Attorney General Mike Cox told The Chronicle on a recent visit to Muskegon."Our mission is to look out for those who cannot look out for themselves," Cox said. "It's obviously reprehensible what some of these businesses will do. I believe in the free market but markets need to be fair."Cox said his office has become involved in rewriting the payday loan laws and regulation of rent-to-own businesses in Michigan. But when it is outright fraud, the attorney general's office files criminal charges, Cox said.That was the case in February when the state busted a $1.5 million food-stamp-for cash ring and brought charges against 27 people involved in eight convenience stores in Southeast Michigan. They had been giving cash to customers for food stamps at less than their value and turning them into the state for full pay.Ripping off the vulnerable is a commonly seen by Paul Kurdziel, Assistant Principal at Muskegon High School who has been working with teen children of working poor families since graduating from Hope College in the mid-1990s. A 1992 graduate of Muskegon High School, Kurdziel is an expert on studying institutional racism."It is all part and parcel of the reality our kids here at Muskegon High are facing," Kurdziel said of poverty businesses. "Our students are facing what I did in high school but it is all upside down. Security, safety and shelter are so important. Their means to get it approximate mine, but it's all wrong."Kurdziel says the sons and daughters of the working poor live in "Bizarro World" of DC Comic fame. He describes his students trying to act like their better-off suburban counterparts but coming up short. Take current fashion as an example: There are urban stores that sell "knock offs" of trendy brands and styles, cheap goods from Asia that have little lasting value, he said."Might they even get things at Wal-Mart?" Kurdziel asks. "They say that (Wal-Mart) is way over there. Mobility is a real issue if you don't have a car. They must go out of their way to get stuff that is right along our way."In Bizarro World, urban students are left to buy at high-priced neighborhood corner markets, Kurdziel said. A Chronicle survey of prices found three such downtown convenience stores selling "groceries" had prices as much as 22 percent higher than Wal-Mart for 15 common items."The invisible hand of free markets doesn't take into account racism, sexism and ageism," Kurdziel said. "Our students are getting what they want, even if it's not what they need."For someone struggling to get by, the lure of filling immediate needs is strong, those that counsel the working poor say."These people tell you what you need and what they can do to get it for you right now," Burgess said of those in poverty businesses. "The poor view some of these businesses as a solution. They would rather rob Peter to pay Paul and they will pay much more for it."Today, Mandisa Bruce does not have a car, a home or a job. What she does have is her faith and sense of humor."It's as bad as ever but I can still laugh and still pray," said Bruce.??2011?.?All rights reserved. ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download