A Michigan circuit court judge on Thursday banned Liquidation LLC and eight related companies from collecting on title loans that charge triple-digit interest rates.
Judge William Collette granted a request from Michigan Attorney General Bill Schuette’s office for a temporary restraining order and set a hearing date of Jan. 27 for a preliminary injunction against Liquidation and the affiliated companies. The companies are accused of charging more than 400 consumers illegal interest rates of up to 251% while frequently seizing borrower’s cars when they can’t pay.
The AG’s office has warned more than 1,000 Michigan businesses against aiding the unlicensed lender, which is based on a remote Pacific island. Liquidation isn’t licensed to lend or do business in Michigan, where title loans and loans charging more than 25% annual interest are illegal. The affiliates named in the case include: Autoloans LLC; Auto Loans LLC; Car Loan LLC; Sovereign Lending Solutions LLC; Sovereign Lending LLC; Management Solutions LLC; and Loan Servicing Solutions LLC. More than 60 Michigan borrowers had their vehicles repossessed and retitled in Indiana by Liquidation and its spinoffs, and investigators discovered 13 repossessed vehicles set to be resold at Michigan auctions. Investigators estimated that a total of 334 Michigan consumers are making payments on title loans to the companies.The AG’s motion was filed in Ingham County Circuit Court and comes two years after Michigan consumers began filing complaints. The AG's office also said Liquidation and the affiliates employ a network of websites, mail drops, payday lenders, banks, call centers and repo companies across the country to sign up borrowers, distribute checks, collect payments and seize the cars of borrowers who default on the abusive loans.
"This company’s business model appears designed to take advantage of financially vulnerable consumers with damaged credit histories,” Schuette said in a statement. "For many of these consumers, their vehicle is likely their largest asset and only means of transportation, making these illegal loans devastating to their pocket books and even to their ability to go to work.”
Liquidation LLC and its affiliates have been sued by several states and private attorneys. The companies didn’t respond to a Dec. 7 cease-and-desist order issued by the AG’s office.
