Making ends meet

View larger image Wilma Ruby, 70, sits inside her New Market apartment on Congress Street. Ruby took on a payday lender after having to apply for a new loan each month to repay an initial advance for car repairs. The Supreme Court of Virginia ruled in Ruby’s favor. Rich Cooley/Daily Recommend This Print This Get E-mail News Alerts Buy Photos/Page Reprints * Breaking News If local news is breaking and you know about it: * Call Us: 800-296-5137 * E-mail Us * Upload Your Photos

Woman wins case against lending service, breaks loan cycle trap

By Sally Voth - svoth@nvdaily.com

NEW MARKET -- When Wilma Ruby's car broke down one too many times, what she'd seen as a solution to her problem ended up costing her nearly 350 percent interest.
Her lawyer took her case to the Supreme Court of Virginia recently and won.

Ruby said she never had financial struggles until her husband, Stanford, died of cancer in 2002. The 70-year-old lives on a $624 Social Security check every month. After rent for her small apartment, she has $275 left.

When her 1988 Ford Taurus started giving her trouble, she turned to Cash Advance in Woodstock and got a $500 loan for a month. She had to pay back $575 a month later. A vicious cycle had begun.

"I had to do it every month because I wouldn't have any money left to pay rent if I didn't," Ruby said. "There, you don't have to have credit. Long as you had a checking account, you could get it."

According to the April 21 Supreme Court decision, she got 33 payday loans between March 2005 and November 2007. She paid $1,700 in interest, her attorney said.

Desperate to stop making visits to the lender, Ruby turned to Blue Ridge Legal Services where Grant Penrod -- now in private practice in Harrisonburg -- took on her case.

In a Monday afternoon phone interview, Penrod said that before 2002 the state set an interest rate cap of 12 percent. After payday lenders complained they couldn't make any money on small-dollar, short-term loans with that cap, the General Assembly allowed companies to make loans up to $500 and charge a one-time 15 percent fee, he said.

But, looked at as an annual-percentage rate, it's "triple digit," Penrod said.

"The General Assembly said you can't refinance, renew or extend these loans," he said.
Cash Advance claimed they weren't refinancing Ruby's loan, but giving her a new loan, Penrod said. Shenandoah County Circuit Court Judge Dennis L. Hupp agreed, but the Supreme Court of Virginia reversed his decision and ruled Cash Advance had violated the Payday Loan Act.

Penrod said Ruby is entitled to all the interest she paid within a statute of limitations period, plus statutory penalties.

"Unfortunately Cashnet [Cash Advance's parent company] seems to have gone out of business, so how much of that is ever going to be collected we don't know," he said. "I've not yet seen the situation where someone was truly benefited by taking these loans out."
Penrod said Cash Advance has asked the Supreme Court to reconsider.

Ruby said she'd tell others not to turn to predatory lenders.

"It's better now," Ruby said. "At least I can pay my bills. I don't have nothing left [over, but] at least I feel good I got my bills paid and something to eat. That's all you need. I don't depend on my children because they've got their own family and children of their own."

One of her four children gave her a 1990 Ford Taurus for Mothers Day.

"Two years newer than my other one, but I'm proud of it," Ruby said.

The car will allow her to get to doctor's visits, the grocery store and yard sales. Ruby spends much of her time watching TV -- courtroom shows are a favorite -- and going online.

"[The Internet] tickles my mind, gives me something to do," she said. "Nobody calls. Nobody comes. You've got to have something to do."

Lindsay Brubaker, with BotkinRose in Harrisonburg, said she represented Cashnet in Shenandoah County Circuit Court, but believes the company did not have counsel in the Supreme Court.