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Middle class using more payday loans

Payday loans and check-cashing services have a certain reputation. They are generally for those Pennsylvania residents who are down on their luck, making minimum wage and unable to make ends meet. Like the growing amount of credit card debt that is plaguing a large number of residents, though, payday loans are becoming more common among different groups of people. These days, the payday loan customer is increasingly likely to be well-educated and squarely in the middle class.

New research from the Urban Institute shows that 41 percent of American households made use of alternative financial services in 2011. Those services include pawn shops and payday lenders, among other non-traditional operations. That is a significant increase since 2009, when just over one-third of Americans were utilizing these services. In addition, about one in four Americans will use one of these alternative methods this year. Most people who are using these services now are using them for the first time, and about half of the users are purchasing household staples with the money they receive.

So, why are Americans increasingly turning to traditionally disdained financial institutions for help? Decreasing financial stability is playing a major role in citizens' ability to pay their debts. Strangely, those in the lower income groups were less likely to use the financial assistance provided by these groups, but individuals making more than $50,000 annually were turning to the alternative methods with far more frequency. This simply demonstrates that the widespread economic depression that swept through the nation had real effects on all socio-economic levels, including families that make more than $75,000 each year.

Pennsylvania residents who are facing financial difficulties do not have to turn to payday loans or increased credit card debt. Instead, they can seek the advice of a qualified bankruptcy attorney, who can help them learn more about their courtroom rights and responsibilities. Bankruptcy may be the best alternative for many residents' financial future, but they will never find out about this option if they do not consult a professional.

business.time.com, "Meet the new payday loan customer: middle-class, well-educated" Martha C. White, Oct. 02, 2013

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Joshua Z. Goldblum, Attorney at Law
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