4 year old payday loan with CMG Group. Help please!
Hey everyone, I could really use your help if you've had experience with this or have extensive knowledge of Michigan law.
In 2011, I filed an application to money mutual (website) for a payday loan. I soon after accepted a loan from CMG Group LLC in the amount of $200. I did receive a document clearly stating the terms of the agreement but I was young and knew next to nothing about credit/. Debt lingo. I just assumed I had to make installment payments like a regular loan until the amount was paid off. Anyways, the loan refinanced every two weeks until paid in full, meaning that nothing less than the complete loan amount would be accepted as payment on the principal. I didn't keep very good track of my finances in those days, so they continued to take $60 out of my account every two weeks until an overdraw on my account caught my attention. 28 weeks had gone by. That's 14 payments of $60 which comes out to $840 for a $200 loan!
So, at that point I contacted my credit union and told them to block all withdraws from CMG. I also never answer phone calls from unknown numbers so it's possible they contacted me several times for some time. That is their claim now anyway. So the debt was sold to a collector (to my knowledge), who has recently taken up contacting me by any means necessary, except by mail. They've called my dad, and probably my employer, and also the county clerk here in Michigan who claims there is a case against me. The collector now wants another $1250, roughly. This is apparently, the original $200 and accrued interest over the years.
At this point, I'm just panicking, trying to find what ground there is left for me to stand on. I read online somewhere that pay day loans must be licensed in your state in order to charge interest on any loan. I called the Michigan Department of Insurance and Finances to verify their credentials and it turns out they do not have proper licensing.
In Michigan, the laws on payday loans clearly state that a payday loan lender may only charge 15% interest on the first $100 of debt, 14% of interest on the second $100 and so on, with loans maxing at $600. If that's the case and I'm comprehending this correctly, my payments should only have been $29 every two weeks for the $200. Instead, my payments were $60 every two weeks.
So far so good, right? Well, it all depends on whether the lender is actually bound by the Michigan payday loan laws. When I spoke to a State attorney (whom I was transferred to by the rep at DIF), she told me that online payday loans aren't considered deferred presentment service transactions (payday loans), but are rather referred to as regulatory loans which are governed differently. At any rate, the company is still not licensed, even under the regulatory loan act. The language in the regulatory loan act is a bit lengthy and confusing (as with most legislative bills), but I believe there are exemptions for lenders that are licensed in states with similar laws. I'm not quite sure where that leaves me which is why I'm currently waiting on a call back from a lawyer.
Until then, I will continue to read the bill and find out what the limitations are on charged interest.
Also worth mentioning, is that the BBB states the company having a federal lawsuit against them by the Consumer Financial Protection Bureau.
Id love to hear from you if you have any info or advice. I would really rather not pay $2100 for a $200 loan. Thanks in advance! I apologize for the wall of text.