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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Apr 2, 2013

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In Texas, State Senator John Carona (R-Dallas), is fighting to have Senate Bill 1247 passed.

The bill seeks to limit the maximum size of payday loans that a borrower can obtain based upon their monthly income. Likewise, the number of times a borrower could “roll-over” outstanding payday loans would also be limited if Senate Bill 1247 passes.

Unfortunately, the bill, while once hailed as being protective of consumers, has actually been “water-downed,” according to consumer advocates.

Don Baylor Jr., Senior Policy Analyst for the Center for Public Policy Priorities, told loans.org that his organization supports adding a limit to the number of times that borrowers can refinance their payday loans.

Originally, Senate Bill 1247 would have required any payday loans borrowed within five days of another loan to be considered “refinancing.” Now that the bill has been revised, this time period has been reduced to two days.

Senate Bill 1247 also previously sought to limit the amount in loans borrowed to be 15 to 20 percent of a borrower’s monthly income. However, under the bill’s current form, these limits would be increased to 30 and 40 percent. 

Baylor told us that while he is currently unable to predict the future, he thinks that Senator Carona would only support something that can pass in the Texas Legislature. He added that Carona has focused on the bill for some time.

Should bill 1247 be passed as it currently stands, Baylor predicts to see an annual savings of between $132 million and $200 million for consumers. Additionally, he believes over 330,000 consumers would be positively impacted and “about $1 million in unnecessary and excessive refinances would be curtailed.”

If implemented, Senate Bill 1247 would also supersede restrictions on payday loan businesses that have been enacted in several Texan cities. Baylor understands that dispute over payday loans has been raging across Texas for some time and that this latest Senate bill was simply another salvo in the ongoing battle between the payday loan industry and anti-payday loan activists.

Sentiment against payday loan businesses is widespread across the state.

“I guess you can say the biggest evidence of that is that we’ve had about five cities enact ordinances in the past year and half.” said Baylor.