House approves change to limit post‑judgment interest on deferred‑deposit loans

The Utah House approved Senate Bill 138, which sponsors said corrects a loophole that had allowed collection agencies to impose contract interest on judgments arising from deferred‑deposit (payday) loans.

Representative Porto told the House the 1999 Check Cashing Registration Act included an absolute 12‑week limit after which contract interest may not be charged on deferred‑deposit loans. Porto said some collection agencies were obtaining judgments and asking courts to impose the contract rate of interest despite the statutory limit, creating what he described as "an unmanageable debt" — for example, "a judgment of several hundred dollars can increase to over a thousand dollars in less than a year." He said the amendment clearly exempts deferred‑deposit loans from the provision requiring judges to impose contractual interest on judgments.

Porto said the bill had the support of regulators and industry leaders, including the commissioner of financial institutions and the Utah Consumer Lending Association, and that the change would prevent future injustices against consumers. The House opened and closed voting on SB 138 and recorded 61 yes votes and 0 no votes; the bill will be referred back to the Senate for the president's signature.

Supporters characterized the bill as restoring the original intent of the statute and preventing post‑judgment interest escalation in cases involving deferred‑deposit loans. Floor remarks noted prior regulatory and judicial complaints about the status of the law.