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Lawsuit Lending Bill Carried Over

By Brandon Moseley
Alabama Political Reporter

On Thursday, March 3, the Alabama Senate carried over Senate Bill 67 sponsored by Senator Cam Ward (R-Alabaster). Senator Paul Bussman (R-Cullman) objected to the bill and said that it went too far. SB67 would effectively end the lawsuit loan industry in Alabama. This is when someone borrows money (normally at high interest rates) based on the likelihood that they will get a settlement from a lawsuit that is pending.

Senator Bussman said that in the effort to reform lawsuit lending we have put all the blame on the victim. Bussman said think about the poor victim minding his business driving along and then to no fault of his own he is hurt in an accident. He has no income because he can’t work. They may not be worthy of having a loan by anybody else. Does he let his house go? Let his car go and not pay his utility bill? We have a situation where we are putting all the blame on the poor victim and not on the insurance companies. There was no discussion over the summer with the companies that do this. Part of the problem is corporations and insurance companies not paying settlements in a timely manner.

Sen, Bussman said, this is an incident that I had. I own the fun time entertainment center in Cullman with a family go cart track. A man in a four wheel drive truck drove through the fence, knocked down the guard rail and drove on to the track and then drove off. My employees videotaped the whole event. He still had cedar wood chips in his grill from my fence when the police caught up with him.

Bussman said my go cart track closed because the liability insurance requires that I have a fence and a guard rail. I had $3000 in damages. It took three weeks to get the guard rail and the fence fixed so I could go back into business. The insurance did not pay for the repairs. If I did not have the money, I would have been out of business. I lost that income for three weeks. The insurance company ran me around the world. I spent many many hours collecting data to show that I lost $5000 in those three weeks. The insurance company would not pay that. They made a small offer. The only options were to settle or sue and if I had sued on contingency an attorney would have charged 30 percent. We have a problem and this bill would hurt the people that need the money.

Bussman said that we need to look at the industry as a whole. Most of these loans are less than $4000. I talked with some of the insurance companies and asked if there is a way for them to front some money to the victims so they don’t need these loans. They said no. That would require them to admit guilt and they won’t admit guilt. I am not opposed to this bill I know that we have a problem with this industry.

Bussman’s motion to carry over SB67 passed. SB67 is co-sponsored by Senate President Del Marsh (R-Anniston) and Senate Majority Leader Greg Reed (R-Jasper).

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SB67 would regulate the providing of money or credit to a consumer pursuant to an agreement under which the consumer is not prohibited from using the money or credit for a purpose other than prosecuting a dispute, and under which repayment of the money or credit is conditioned upon the consumer’s recovery of money. The bill would limit the interest rate charged to jut ten percent and would limit the lender to exclusively or primarily the amount recovered by the consumer in the settlement. The bill would require that each consumer lawsuit lender obtain a license and would allow the Superintendent of Banks of the State Banking Department to issue regulations and interpretations under the act.

The industry claim that theres is such a high risk business that they could not operate under these terms and suggest that this legislation is being promoted because lawsuit loans give plaintiffs more time to resist insurance companies efforts to offer a low ball settlement and those insurance companies want to regulate this industry out of business.

The Business Council of Alabama (BCA) supports SB67. BCA President and CEO William J. Canary testified at a Feb. 10 public hearing on consumer lawsuit lending and stated the BCA’s position in support. “A diverse national coalition of business and consumer groups have voiced support for lawsuit lending reforms, including the US Chamber of Commerce, National Black Caucus of State Legislators, and the national Hispanic Caucus of State Legislators,” Canary said.

 

Written By

Brandon Moseley is a former reporter at the Alabama Political Reporter.

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