State Treasurer Giannoulias tackles 'debt trap' issues

State Treasurer Giannoulias tackles 'debt trap' issues

By Myra Eder
Contributing Writer

Face with a depressed economy, interest rates at historically low levels and rampant consumer fraud, Illinois State Treasurer Alexi Giannoulias has had to respond to colossal challenges in his first term, and since taking office in 2007, he has not wasted any time.

In mid October, Giannoulias addressed the “Escaping the Debt Trap” initiatives his office has launched in cooperation with other officials, banks and credit unions.

Predatory lenders, including those in the credit card industry, are at the top of Giannoulias’ hit list.

“The average Illinois family owes more than $8,000 in credit card debt, with interest mounting every month,” Giannoulias told some 150 members and guests of the Chicago Southland Chamber of Commerce at the Holiday Inn-Tinley Park Convention Center.

“Unfortunately, some people out there see all this as an opportune time to scam the unwary. In fact, there are more payday lenders out there in Illinois than McDonald’s and Burger Kings.”

Payday lenders too often turn small loans into debt beyond any client’s ability escape, he said.

Consumers plagued with mounting credit card bills or payday loans with outrageous interest too often are lured by the false promises of so-called debt settlement companies.

“Unscrupulous claims by these lenders, whose ads often are seen on late night T.V., offer to help people pay only pennies on the dollars they owe. These companies charge ridiculous fees for terrible advice,” Giannoulias said.

“We want to put them out of business and provide consumers with legitimate alternatives. Unfortunately (debt settlement firms) are not regulated in Illinois. Our office is pushing for legislation that would require them to be licensed. Customers, likewise, would have to sign forms stating they are aware of any fees.”

For now, Giannoulias’ collaboration with state lawmakers already has prevailed on one issue.

Credit card peddling on college campuses through alumni associations, with various tantalizing offers including free gifts and coupons, will be virtually illegal at the start of the new year under legislation the treasurer initiated.

Another initiative up and running is Bank On, an innovative outreach program to assist “unbanked” residents—or those who have no relationship with legitimate financial institutions, banks and credit unions—to provide financial products at low or no cost. Unbanked consumers are concentrated in underserved and minority communities.

“Bank On,” already underway in Rockford, will open doors in Aurora early next year with more regions to follow as the treasurer’s office works toward protecting families and communities.

Posted on Thursday, November 05, 2009 (Archive on Thursday, November 12, 2009)
Posted by jstoltz Contributed by jstoltz

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