A bill that would put severe limitations on payday lending corporations passed an Assembly Committee Wednesday and will move to the Assembly floor Feb. 16.

Payday loan corporations are businesses that give out short-term loans with extremely high interest rates. The loans basically become an advance on the borrower’s next paycheck and are usually targeted at lower-income individuals who cannot get credit elsewhere.

The bill would prohibit borrowers from taking out more than one loan at a time, as well as prevent lenders from “rolling over” a borrower’s loan. This practice occurs when a lender rolls all of a borrower’s debt into one new, larger loan, which legislators say can trap people in a cycle of debt that is hard to break.

Auto title loans, which allow a payday lender to use a borrower’s automobile as loan collateral, would also be banned.

Rep. Andy Jorgensen, D-Ft. Atkinson, said he came up with the idea to write the bill a couple of years ago after seeing six payday loan stores on one street in his town of Ft. Atkinson.

He said after investigating the stores, he found out there was little to no regulation in the industry, and consumers were not being protected.

“We wanted to make sure people knew what they were getting into when they went to get a payday loan,” Jorgensen said. “[Lenders] didn’t have to show them anything. We wanted people to see the tricks they play on unsuspecting folks. People get caught in a debt trap they can’t get out of.”

The bill would also require payday lenders to disclose all fees and costs of the loan to the borrower before they enter into the loan, as well as to inform the borrower they may rescind the loan by the end of the next business day.

They would also have to provide the borrower a written copy of informational materials on payday loans and the payday loan industry.

Rep. Dean Kaufert, R-Neenah, was one of the five Republican committee members to vote against the bill. He said it was because he felt the process was too rushed.

“To rush this now just for the sake of rushing it just kind of ticks you off,” Kaufert said. “We weren’t allowed to do any amendments today — it was introduced yesterday — and so it’s going to change. I said at the end of the day I’m going to support some regulation on the payday lending industry.”

Kaufert also said he had concerns regarding the recent controversy surrounding Assembly Speaker Mike Sheridan’s, D-Janesville, relationship with a payday loan lobbyist, as first reported in a Feb. 1 article by the Milwaukee Journal Sentinel.

The relationship had received a lot of attention in the media after Sheridan admitted he was in a relationship with the lobbyist, Shanna Wycoff, after switching his position on a rate cap bill affecting the industry. However, Sheridan has vehemently denied his relationship has anything to do with his switched position.

Kaufert said he believes the Democrats rushed the bill because, “they just want to get the bill out of the headlines.”