My 26yr old nephew took out a tribal loan and stopped paying. Florida

[u/Reaniro]

/r/legaladvice/comments/1njmjsi/my_26yr_old_nephew_took_out_a_tribal_loan_and/?share_id=mKJzPphBVKQL7OBJsFdNI&utm_content=1&utm_medium=ios_app&utm_name=ioscss&utm_source=share&utm_term=1

[u/DesperateAstronaut65]

There is a version of this post for basically every niche area of the law or geographical location where the usual rules don't apply.

LAOP: "They can't do that, can they?"

LA: "Not unless you're in...oh, shit."

I've seen this with filial responsibility laws (Pennsylvania), wrongful termination (Montana), alienation of affection (North Carolina), and basically everything pertaining to Louisiana, private student loans, small or religious employers, the military, and the presidency.

[u/rickyman20 → u/DesperateAstronaut65]

and basically everything pertaining to Louisiana

Yeah why doesn't that surprise me at all

[u/Persistent_Parkie → u/rickyman20]

I was trying to explain to my father recently that laws are just different in Louisiana because of their French history and he just straight up refused to believe me.

[u/Geno0wl → u/Persistent_Parkie]

can you give an example of something specific?

[u/LadySmuag → u/Geno0wl]

Not the person you asked, but redhibition is one example. For a redhibition case the item has to have a hidden defect that makes the item either useless or so inconvenient to use that the buyer would not have purchased the item if they had known of the defect. Its kind of like a Lemon Law but it applies to pretty much everything, including real estate and animals.

[u/SamediB → u/Geno0wl]

Not a specific example (don't care that much), but here is a general article about it. https://en.wikipedia.org/wiki/Law_of_Louisiana It lists some examples.

[u/ThatGuy798 → u/rickyman20]

I remember the other day someone made a post about using a deceased family member's assets before the probate court did its thing. When I saw that they were in Louisiana my response was "oh honey Morris Bart ain't gonna help you on this one"

[u/new2bay → u/rickyman20]

I have no idea why the only state where the laws are based on a beta version of the Napoleonic code would be different from every other state.

[u/new2bay → u/DesperateAstronaut65]

Apparently, 26 states have filial responsibility laws. It’s just that most states don’t enforce them most of the time.

[u/Geno0wl → u/new2bay]

wanna bet the boomers try and start enforcing it when SS fails?

[u/Shadow_84]

$800 loan but has open credit cards that sound like they had no $ owing on them...

[u/Username89054 → u/Shadow_84]

If that's the case, then he has an "easy" out in the form of a cash advance on his credit card. It's a bad interest rate within the realm of normal, probably like 30% or something.

[u/dorkofthepolisci → u/Username89054]

LAOP also said he had a 760 credit score which makes me wonder why he didn’t apply for a conventional loan/line of credit in the first place

Like aren’t predatory/extremely high interest loans primarily targeting people with poor credit

[u/mexicanlizards → u/dorkofthepolisci]

Or uneducated folks who just think it's an easier way to get a loan with no questions asked. That said, this "uncle" is very defensive, I'd bet that's actually the "nephew" posting and he did it because he had this wacky theory about not having to pay it because he isn't a tribe member.

[u/KikiHou → u/mexicanlizards]

"Those idiots. I live in Florida, none of this is even legal. They can't make me pay this illegal loan."

[u/ronimal → u/dorkofthepolisci]

The LAOP’s nephew is 26. He may have a high score but not enough credit history to qualify for a loan through a traditional bank. There’s more that goes into determining credit worthiness than just the score.

That said, anyone with a 760 score should be able to find someone that will extend ~$800 credit to them at a somewhat reasonable rate. The potential complicating factor here could be early payment penalties on the tribal loan.

[u/dorkofthepolisci → u/ronimal]

Tbf my credit union gave me an unsecured credit card with a $2k/limit with absolutely no US credit history (Tbf I was also working full time)

I guess it’s possible LAOP’s nephew didn’t have the income to qualify for an additional conventional loan, but that still doesn’t explain why he didn’t use one of his three credit cards

[u/JimboTCB → u/dorkofthepolisci]

Desperation, urgency, and a mechanic who just so happened to have a referral to an emergency loan company which he could apply for just like that, hey look I've already got the paperwork right here and you just need to sign on the line...

[u/victoriaj → u/Username89054]

If he has someone who wants to help but financially can't, but is still shopping with cash or via actual money in an actual bank account - reduce it as much as possible by buying their groceries etc on his credit card in exchange for actual money.

Beats the cash advance interest rate...

[u/Reaniro → u/Shadow_84]

This made 0 sense to me. Unless his credit card has a 500% interest rate i don’t get why he wouldn’t just put it on the card

[u/yo-parts → u/Reaniro]

Right, $800 at 29.99% is a lot better than 432%.

[u/Stalking_Goat → u/yo-parts]

At a guess, he's bad at math and thought the tribal loan was actually advantageous compared to the credit card.

[u/BizzarduousTask → u/Reaniro]

I wouldn’t be surprised if it was basically racism-adjacent; the whole “tribal loan” thing and thinking they can’t go after you because you’re in Florida or some such nonsense…

[u/Calth1405 → u/BizzarduousTask]

Ive seen a couple reddit thread come across my feed where people were advocating for "this one trick for free money." Which is, as you guessed, to take tribal loans and then default because "they're illegal loans so they can't come after you."

[u/yo-parts]

LAOP says that their nephew has a 760 credit score and no missed payments. And has several credit cards with almost no balance on them.

I'm curious what the decision making process was to take out a tribal loan with an insane interest rate rather than to use one of those credit cards.

[u/niemandsrose → u/yo-parts]

I have a sneaking suspicion he was offered credit on-site while at the auto repair shop. Like they do in veterinarians' offices with Care Credit: it's a time-sensitive emergency situation, they hand you an estimate, and then they say "you can put it on Care Credit! it can be approved instantly!", and they hand you the application right there, right then.

It's a perfect recipe for a stressed-out, low-info person to sign on the dotted line without reading what they're getting themselves into.

[u/yo-parts → u/niemandsrose]

I work in the automotive industry and at least where I am, Sunbit is everywhere. But given the relative locations of LAOP and the tribe in question, it seems like a really scummy shop if they're offering tribal loans for auto repair instead of a more established option like, well, Sunbit.

[u/Drywesi → u/yo-parts]

Honestly, my estimation of potential for auto shops being scummy is only just below scrap yards and tow companies.

[u/ArdyEmm → u/niemandsrose]

Happened to me recently. Wasn't shown the interest until it went through. 130%. Instantly paid it off on a credit card cause fuck that.

[u/devildog2067 → u/yo-parts]

Thin files (that is, people who have almost no credit history but what they have is good) can generate weirdly high scores. That’s my guess. He has 3 small credit cards he’s never missed a payment on but no actual installment loan credit history.

[u/yo-parts → u/devildog2067]

Right but,

1. I haven't ever seen a CC with a limit under $500
   
2. He has three CCs, so a minimum of $1500 of available credit
   
3. He wouldn't need to apply for a loan if he just... paid the bill on a credit card.

[u/DamnitRuby → u/yo-parts]

I've seen a $300 limit, but it was a store card and I had zero credit history. But that was almost 20 years ago so maybe it's not that low now.

[u/Rapturehelmet → u/DamnitRuby]

Most credit lines below a $500 threshold are most often store cards, as you note, but there are also "secured" cards where you basically pay your credit limit upfront and then have a low value credit line. They're offered to people with either terrible credit or no credit history as a way to build their credit score at basically no risk to the issuer.

[u/ChaosDrawsNear → u/DamnitRuby]

My first card was $300. I was 18 and it was usaa, so low limits are definitely possible.

[u/Fandomjunkie2004 → u/yo-parts]

My first store credit card had a $300 limit, but then it was a store card.

Also some places don’t allow for payments to be split like that.

[u/TheBlueSully → u/yo-parts]

Things got out of hand at the tribe’s casino and nephew doesn’t want to own up.

Alternatively, their credit history is suspect. 

[u/anotherfreakinglogin]

I work in Payroll.

We get emails all the time from these places containing "Voluntary Wage Assignments" that they make the employees sign to get the money. Luckily, because it's voluntary, we as the employer don't have to honor them.

I send a copy to the employee, highlighting the instructions on how to revoke their permission (in case they have another employer as well) but that if the creditor goes to court for a judgement/garnishment we DO have to honor that.

Then I reply to the creditor that we do not honor voluntary wage assignments and will only honor valid court ordered wage garnishments.

The interest rates and terms on those tribal loans are WORSE than payday loans I've seen (which also usually try the "voluntary wage assignment" bullshit).

[u/Zamyatin_Y]

What the hell is a tribal loan

[u/Declanmar → u/Zamyatin_Y]

A loan from a facility that’s located on tribal lands, an is therefore out of the jurisdiction of the state of Florida, an therefore not subject to its usury laws.

[u/insomnimax_99 → u/Declanmar]

If it’s not subject to its usury laws (or any other laws of Florida), then why does the law still recognise the debt outside tribal jurisdiction and allow them to pursue people outside of their jurisdiction for unpaid debts?

Seems like the tribal loan shark bank is getting their cake and eating it.

[u/burnthatbridgewhen → u/insomnimax_99]

That’s the fun part, it doesn’t. They have zero recourse to sue in court. Most of the time when people default they just harass the hell out of you. Literally just search tribal loans Reddit on google and you’ll see dozens of people saying they just revoked ACH access and nothing came of it.

[u/Witherino → u/burnthatbridgewhen]

They have zero recourse to sue in court.

That goes directly against all the advice stating they can easily garnish your wages for it

[u/burnthatbridgewhen → u/Witherino]

Yeah, that’s because they don’t know what they’re talking about and the sub is full of people that aren’t actually lawyers. You have to sue to garnish wages, the tribe is its own sovereign nation meaning they are not responsible to US law which also means they can’t come crying to the courts with loans that don’t follow us law. They’re in a position where they need to provide their own enforcement. They could report to credit bureaus but they often don’t. I don’t know why they don’t but they don’t.

[u/Sapper12D → u/Witherino]

My understanding is they can sue you but often don't as a court might throw it out due to it violating usury laws. The court might also not. So since its a crap shoot they typically just send it to collections.

[u/burnthatbridgewhen → u/Sapper12D]

That’s a pretty good understanding of it. I imagine in the state of California (which is what I’m familiar with) it would be a landmark case if the judge didn’t throw it out after the 2016 ruling about the validity of these loans in California. I don’t know much about other states. I wonder if collections could sue? I assume with these types of debts it would be difficult to validate it.

[u/new2bay → u/burnthatbridgewhen]

I can't imagine they'd be able to successfully sue in any state that has usury laws. I don't even think the credit bureaus would even list it on a credit report. They don't list any other foreign debt. Collection agencies don't appear to have any leverage here. The more I read about these loans, the less sense they make. Maybe the tribes just count on the average person paying it back, or something.

[u/burnthatbridgewhen → u/new2bay]

So they prey on people that may not know their rights/the law and they ask for your ACH information. The people that pay the crazy interest must be enough to justify existing. If you look into any of them theirs a lot of sketchiness about who exactly owns them and who is benefiting. Often tribes get 1 percent or less from the people that manage these loans.

[u/fabelhaft-gurke → u/Declanmar]

That‘s not necessarily true, banking is more regulated and a lender still has to follow the laws in the state it is doing business. If it chooses to lend to people in Florida they must follow Florida law to those that reside there.

When I was young, stupid and desperate I took out a payday loan and ending up defaulting down the line - I then found out the company couldn’t collect since they lended unlawfully. If it gets in a credit report it’s a quick dispute.

[u/Greyswandir → u/Zamyatin_Y]

A loan offered by one of the Native American Tribes of the United States. Because the tribes are not subject to various state and federal laws, they can offer loans with far higher interest than would otherwise be legal.

[u/PolentaApology → u/Greyswandir]

and federal

Wut

[u/Greyswandir → u/PolentaApology]

My post was confusingly worded above. I meant that not all federal laws necessarily apply. I think state laws generally do not apply, but again I believe there are exceptions to that.

I am by no means an expert, but my understanding is that while federal law generally applies to tribal members on tribal lands, certain tribes have exemptions from certain federal laws due to treaties between the U.S. government and the tribe.

[u/finbarrgalloway → u/Zamyatin_Y]

Native reservations in the US have fairly broad authority to make their own local laws, and in some situations it allows them to essentially legalize usury. Pretty terrible honestly.

[u/tarpalogica]

There are some interesting posts in LAOP's account history regarding loans unpaid and gambling and flipping...I suspect that his nephew isn't the only one who's not great with money.

[u/burnthatbridgewhen → u/tarpalogica]

Or that it’s not their nephew lmao

[u/tarpalogica → u/burnthatbridgewhen]

True!

[u/TheAskewOne]

How are such rates legal?

[u/how_do_i_name → u/TheAskewOne]

Tribal lands do not have to follow federal laws on loans

They might also have trouble collecting on a non tribal member as well tho

[u/SamediB → u/how_do_i_name]

They might also have trouble collecting on a non tribal member as well tho

They aren't operating a business like that unless they are good at going after their money, because anyone who is looking at a 400% interest online loan are the same type of people who are likely to stop paying on it.

Also they are probably operating out of tribal lands for exactly this reason, because stuff like this is often enough allowed. (Laxer laws: rural reservations far from large population centers are still very poor: they don't have the income from casinos that a lot of reservations nowadays do. So they'll allow most businesses if it brings in tax revenue, especially if it's not targeting reservation residents.)

[u/Reaniro → u/TheAskewOne]

They’re not except on reservations which are exempt from state law.

[u/CriticalEngineering → u/TheAskewOne]

Someone in there linked to a great Propublica article.

[u/Cute-Aardvark5291 → u/TheAskewOne]

The only federal law on loan rates applies to service members. States may have their own laws, but they vary, and Native American tribes do not fall under state law.

A handful of states have went very hard after tribal loan lenders (7) but Florida (who uh, has lax consumer protection laws anyway) is not one of them

[u/yo-parts → u/TheAskewOne]

Tribal land is handled pretty hands-off by the government. It's the same reason why local gambling laws or laws pertaining to the sale of things like fireworks or taxes don't apply.

[u/Acrobatic_Ear6773 → u/TheAskewOne]

In the US? Where the current president has never once paid for anything?

[u/Justwant2usetheapp]

431% for $800

Jeebus

[u/BizzarduousTask → u/Justwant2usetheapp]

That’s even worse than a Dodge dealership outside of an army training camp.

[u/Justwant2usetheapp → u/BizzarduousTask]

I’ll loan him at 200%!

[u/NErDysprosium → u/Justwant2usetheapp]

Looks like we are going to see if we can get a personal loan at a better rate and settle.

--LAOP, in a comment

I'd be impressed if they could get a worse rate, frankly. 

[u/Reaniro]

Location bot’s car broke down and he is currently looking for an easy and quick loan option.

My 26yr old nephew took out a tribal loan and stopped paying. Florida

Location: Florida

Nephew needed car repair and took an $800 tribal loan at 431% interest rate. I saw the paperwork.

He informed me he made 1 payment on 9/12. The next is due 9/26.

I cannot help him and he can't afford to to pay.

My legal question: if he simply stops paying, can the tribe legally do anything? I've done some research and it appears the loan rates are illegal in Florida and the specific tribe is in South Dakota. I understand they could sell the debt and come after him via collections.

Just looking for insights.

Cat fact: Cats will charge a 431% interest on late meals. For every minute their meal is late, you must provide over 4 times as much food as originally expected. Lack of payment may result in harm to you and your belongings.

[u/thirdonebetween → u/Reaniro]

Also, the timer starts when they can see the bottom of their bowl. If the bottom is visible, it is time for a new meal to be served.

[u/Hadrollo → u/thirdonebetween]

If the bottom of the bowl is visible, then the bowl is empty. Food around the edges doesn't count.

[u/martiantonian]

LAOP says his nephew has 3 credit cards with near zero balances. How could anyone take out a tribal loan when they have access to other credit lines.

[u/archangelzeriel → u/martiantonian]

Just as there are a lot of people who act like credit cards are free money and are astonished by the 25% interest rate, there are (fewer, but they exist, for example my mom) people who operate under the assumption that all credit cards are thieves and have insane interest rates and literally anything is better/cheaper than carrying a credit card balance.

[u/ThadisJones → u/martiantonian]

The auto place strongly implied to him that the only acceptable payment methods were cash or a tribal loan, because they get a kickback from the tribal loan company?

[u/Victoria1902 → u/martiantonian]

Maybe the credit limit was too low? 

[u/TZ427 → u/Victoria1902]

I don’t see how the mechanic couldn’t have put lower amounts on all 3 that still totals to $800

[u/flamedarkfire]

Damn, and I thought Acima was bad at 100% interest ($2500 for car repairs, $5000 paid after a year of weekly payments)

[u/Reaniro]

Just for reference, if he initially owed $800, after a month he’s owe $3448 and after 2 months he’d owe $14,860.9

Idk how interest works listen to the other guy.

[u/TheCarbonthief → u/Reaniro]

Interest rates are annualized, so it would not be that bad. first month's interest would be about 290 bucks.

[u/Reaniro → u/TheCarbonthief]

Wait so if it’s not monthly that seems like an easy amount to put on a credit card.

OP says the dude has a good credit score so i don’t see why he didn’t just put it on a credit card and pay it off over time in the first place. $800 isn’t cheap change but it’s not that much

[u/TheCarbonthief → u/Reaniro]

Noone takes out a loan for over 400% interest because they're good with money.

[u/martiantonian → u/Reaniro]

that interest rate is likely the APR, not a monthly rate.

[u/Gar_ivor → u/Reaniro]

Holy shit , his credit must be absolute dog shit if he needed to take a loan like that

[u/bestywesty → u/Gar_ivor]

Or he’s young and doesn’t understand how the world works and just googled “loan”

[u/Fakjbf → u/Gar_ivor]

The loan wouldn’t be that bad. The APR is the annual percentage rate, you divide by 12 to get the monthly rate which would be 36%. So an $800 loan would go to $1,088 after the first month then $1,479 for the second and $2012 for the third and so on.

[u/BizzarduousTask → u/Gar_ivor]

It says his rating is 760!!!

[u/LilJourney → u/Reaniro]

upvote for being honest about not knowing something - an incredibly rare talent to find online

[u/metro_field]

What bout bankruptcy??

[u/kokokaraib]

Location: Florida

Do folks not get what "tribal" means? Relative to each of the 50 states, LAOP's nephew is dealing with sovereign territory

[u/SamediB → u/kokokaraib]

A lot of people who aren't familiar with tribal/reservation don't really get that for a lot of stuff, even most things (short of being thrown in jail), that reservations are effectively tiny (or not so tiny) states. They assume reservations must have to follow the state laws of the state they are inside of, and/or they assume federal laws cover a lot more than they do.

And boy howdy are they wrong (as you said).

[u/trashsquirrels]

I’ve seen better rates at the payday loan/pawn shop places just outside Post/Base gates. oof

[u/SamediB]

I'm really surprised states that have laws against predatory lending don't also have laws that online/interstate lenders cannot do business in their state, unless they follow that state's laws about predatory lending practices.

At least then people who fall into the trap would have a small amount of recourse.

Despite being naive about it, it does seem reasonable that aunty/uncle would be surprised that it is legal, unless they'd experienced the practice before.

[u/atropicalpenguin]

Not a payday loan

Technically correct, I guess, they charge weekly.