Michigan puts brakes on illegal auto title loans
Financially-troubled Michigan drivers who turned to bad title loans for cash may find some relief after action by the state Attorney General's Office.
Michigan Attorney General Bill Schuette has fought to stop collections on illegal auto title loans offered to Michigan consumers from Liquidation, which does business as AutoLoans, Sovereign Lending Solutions, Car Loan and other names.
The state has said these companies are not authorized to do business in Michigan as a pawnbroker or even as a limited liability company.
More than 440 MIchigan consumers were stuck with triple-digit interest rates ranging from 161.95% to 251.03% after taking out such loans online. The loans ranged from $1,000 to $5,000.
The auto title loans were secured by a vehicle that the consumer owned outright. The Liquidation loans required possession of the vehicle title and the installation of a GPS tracking device on the borrower's vehicle before providing the loan.
Often, consumers were not even given a copy of the loan documents or advance notice of abusive rates.
When borrowers missed payments, Liquidation made harassing phone calls. In some cases, the company repossessed the borrower's car or truck and sold those vehicles at auction houses. The lender then kept all the proceeds of those car sales.
On Wednesday, Schuette said he had secured a default judgment and final order for permanent injunction from Judge William Collette in Ingham County Circuit Court against Liquidation and several associated companies.
The court action bars any further collection activities on these illegal title loans that were made to Michigan consumers.
Michigan consumers who were victims of the illegal title loans could be eligible for a new replacement title through the Michigan Secretary of State to remove Liquidation or another related company name as a lienholder.
But the consumer must be a current owner of the vehicle with a Michigan title naming one of the companies in the case. And the consumer had to be a Michigan resident at the time the loan was issued.
Concerned consumers can contact the Michigan Secretary of State at 888-767-6424 and request to be talk to the Office of Investigative Services complaint line. Or call the office directly at 517-335-1410 from 8 a.m.-5 p.m. weekdays. You'd need your vehicle identification number and license plate number.
Defendants are prohibited from accepting any title loan interest or other loan payments made by a Michigan consumer. No collection calls or e-mails. No vehicle repossessions, no threats of repossession.
Michigan regulators noted that Liquidation is an off-shore business organized in the Cook Islands. So, the state said, it's uncertain whether an award of $2.2 million will ever be collected.
Consumers are warned that auto title loans carry a great deal of risk and are not permitted by Michigan's lending laws. See www.Michigan.gov/ag.
Contact Susan Tompor: 313-222-8876 or email@example.com. Follow her on Twitter @Tompor.
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