For Winfield, the three years since losing her home have been a trial. She has moved four times, she said, most recently to leave a neighborhood where her house was robbed and shootings were frequent. And, like many black residents of the St. Louis area, she speaks bitterly of her experiences with police after an unpaid speeding ticket led to a weekend in jail.
Still, she remains determined to provide a stable environment for her children, she said recently, sitting in her current home, which remains sparsely furnished as a result of the burglary.
“I just want to do everything that I can to make sure that my kids don’t go through as much as I went through,” she said. Her own upbringing was marked by her mother’s addiction to crack, she said, and while her kids have been through a lot, she thinks she’s largely succeeding at her goal.
But garnishment has proven to be a legacy she couldn’t escape. Winfield remembers her mother trying to make a reduced paycheck stretch further, and it has become part of her life, too. Midwest Acceptance began seizing 25 percent of her after-tax pay in March 2012.
Every two weeks, almost $250 was gone. “I was not making it,” she said.
During an online search for help, Winfield learned she qualified for a “head of family” exemption under Missouri state law, which reduces the maximum garnishment to 10 percent. The law doesn’t require anyone to tell debtors like Winfield of the exemption, and the burden is on them to claim it.
The extra $300 each month was “a lifesaver,” she said. “I can at least pay rent and pay bills.”
But because she is paying less each paycheck, she will be stuck paying more over the long term.
In Missouri, lenders can request that judgments accrue interest at the contract rate. In Winfield’s case, her debt continues to grow at an annual rate of 30 percent. The $4,900 Winfield owed after her old car was auctioned became $6,900 by the time Midwest obtained its judgment. She has had more than $8,500 taken from her paychecks over the years and still owes more than $2,400.
If she ever pays off the loan, which at the current pace won’t be until 2017, she will have paid a total of at least $13,000 to Midwest.
In a written statement, Midwest Acceptance said it was legally allowed to charge post-judgment interest at the contract rate, but was willing to accept less than was owed “as long as the client continues to communicate with us and makes a good-faith effort to reduce the balance.”
The buildup of interest can be even more punishing on high-cost installment loans. The law allows lenders to make loans with interest rates in the triple digits and then attach that rate to court judgments. It’s a system that can turn a $1,000 loan into a $40,000 debt, ProPublica has reported, and leave the debtor with a choice: endure garnishment in perpetuity or declare bankruptcy.
These costly debts hit black communities in St. Louis at a rate about five times higher than mostly white neighborhoods, ProPublica found. High-cost installment lenders and subprime auto lenders obtained more than 8,200 judgments against residents of mostly black neighborhoods from 2008 through 2012. The lenders have seized at least $9.5 million from debtors through those cases.
ProPublica found even more of an imbalance in the Chicago area. There, the national subprime auto lender Credit Acceptance obtained judgments against residents of mostly black neighborhoods at a rate 18 times higher than it did against residents of mostly white neighborhoods. Credit Acceptance did not respond to multiple calls and emails seeking comment.
There is evidence that black consumers take out higher interest loans more often than whites. For example, black consumers are much more likely to take out a payday loan than whites with similar income, according to the Survey of Consumer Finances. Recently, there have been a series of federal enforcement actions against auto lenders based on allegations that they over-charged minority borrowers.
In its statement, Midwest Acceptance said there was “no intentional disparity of any kind in lawsuits or garnishments” and that the company had no information on the race of its borrowers and treated all customers the same.