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Dealing with Payday Loan Companies

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Flyingifr:

--- Quote ---Originally Posted by mickes on ArtofCredit:
I took out a payday loan in May 2005    defaulted    blah blah the whole common story. The total amount due was $621.57. I made payment arragements via email (still have all emails saved) to make $100.00 payments every pay via western union. Then after making 3 $100.00 payments I get an email from the lady saying they wanted the remaining $321.57 due in full. When I told her I couldn't make the payment she said that they were turning me over to a collection agency and to make no more payments via western union.

Last night I get a call around 10:00pm. Some guy was like I am with a collection agency (didn't say a name) trying to collect an outstanding payday loan from (blah company)    I am calling to get payment arragements.

I told him I wasn't giving out any of my personal information over the phone and he was like well we will be contacting your employer to garnish your wages    have a nice day and hung up.

What do you think? What can they legally do?

Thanks!
--- End quote ---

I see posts like this very often always saying the same thing    and that boils down to "I have a loan witha payday Loan company that I didn't pay back and now they are making themselves a pain in the butt    calling me a hundred times a day    yelling at me    threatening to garnish my paycheck    take my home    car and birthday and refusing to allow me to work the problem out. What can I do and what can they do?"

The very nature and tone of the question makes me believe that the Payday Loan Company (PLC) has somehow convinced you that (a) they are above the law    (b) you have to accept that status    (c) that you are powerless and (d) they intend to immediately carry out their threats. Sorry to bust the bubble    but none of the above is true.

1. No business is above the law. While FDCPA does not apply to Original Creditors (OC's)    it is important to know when the PLC has "crossed the line" and has placed itself under FDCPA. Once they cross that line    they cannot retreat back. (see FDCPA Section 803(6)) That line is crossed when they try to make themselves appear to be an entity that they are not. A typical example of this would be when Ripoff Payday Loans starts calling and saying they are now Usurious Collections    even though it is still really Ripoff Payday Loans. At that time they "crossed the line" and placed themselves subject to FDCPA. That said    even if they don't cross the line    before they can take anything away from you there is a legal nicety called "suing" that they have to go through. Sorry    but you can't take anything you don't have a specific lien on without a Court Judgment.
2. No consumer has to accept the status that PLC's try to assign to them - powerless and without any recourse. There is plenty you can do to stop a PLC from ruining you    and believe me    they will try. One of the common tricks a PLC will try to do is to attempt to turn your check into an electronic debit    and hit your account early and often. If they get paid    someone else doesn't. If they do it and don't get paid    you get a pile of NSF charges. How do you stop this? The answer depends on when you are going to take the steps to protect yourself. If you act before you take out the loan    just notify your bank in writing (preferable directly to a bank officer) that they are NOT to permit any electronic debits to your account that are not initiated by you. In other words    all electronic debits must have a PIN number of your choosing to validate them. If you take this step after the fact    then (especially if the PLC has tried the debit already) you have the Routing Transit Number and Account Number of the PLC - instruct your banker to refuse ANY debit from that source. If the banker won't do this    close the accoumnt immediately.

3. Now that you see you are not powerless    you need to understand the reality of the situation. You do this by understanding some of the legalities of the transaction. Here is one of the most common collection lies the PLC will use:

Your check bounced    the sheriff is on his way over to arrest you. This lie finds its ounce of truth in the statement that bouncing a check can be a crime. Notice I didn't say "is" - because there are a couple of elements of the crime that must be proven before a District Attorney will take an interest in the case. The first comes to 'criminal intent". The nature of the Payday loan industry is that it anticipates that the borrower will have a certain amount of money in a particular account on a particular day. If your bank statement shows that to be the case    then the prima facie evidence is lack of a criminal intent. If not    then the reason why would be important. Other checks go there first? You cannot control which checks arrive first    particularly with Check21 laws in effect.

Here in Pima County    Arizona    the District attorney has a NSF Check program. There are specific rules for submitting a check to them    and being a Payday Loan company will eliminate them from the program (one of the rejection criteria is "Checks that are predated/postdated or or where an agreement was made to hold the check for a later date"). This eliminates PLC's AND CA's from the DA's program and therefore "the sheriff is on the way" is a lie. Check your county's or city's District Attorney's Bounced Check Reovery program for similar criteria.

Here's Pima County's: http://www.pcao.pima.gov/Docs/Bad%2...uide%202005.pdf

Now that the facts have been reduced to the fact that a PLC is no better than any other creditor and its debt enjoys no particular "privileged status"    you can act accordingly.

4. Now that we have reduced the PLC to just another creditor    I recommend you read "Understanding the Collection Department"    "Understanding the Collection Agency" and "They have an Attorney    Now the Fun Starts" in the Flyingifr Method (link in my sig line). Their refusal to "accept" payments in line with your ability to pay is just positioning. My advice - send them a money order    and see if they cash it or return it. It doesn't make a difference that they told you not to send it - just send it. Sending certified funds back to the debtor over a small debt like a Payday Loan looks awful bad in Court    especially if the payment arrangement you proposed would have paid the debt off before trial date. Nothing looks worse to a Judge than a debtor/defendant appearing in Court    placing enough money orders on the judge's desk to pay the debt in full along with letters from the Plaintiff that they are refusing the payments    and then they sued for the debt. Just watch the expression of anger on the Judge's face when he asks the plaintiff's attorney "why are you wasting the Court's time with this?"

Just remember - playing "hardball" is part of the positioning. In collections    the squeaky wheel gets the grease. PLC's hire the most aggressive collectors they can because an APR of 400% just can't generate enough profits for them.

roybean:
What about arbitration agreements that many payday loans try to inforce?

roybean:
Borrowers keep returning for payday loans
Last year, the industry generated about $6 billion in fee revenue and $40 billion in loan volume at 23,000 stores, according to estimates from the investment firm Stephens Inc. At the six public companies alone, loan volume rose 24 percent to approximately $7.4 billion in 2005 from the previous year.

http://www.msnbc.msn.com/id/12919316/

http://www.consumerlaw.org/initiatives/payday_loans/pay_menu.shtml

poker:
What is the best way to deal with a pay day loan company that makes idle threats?  (suspend driver's liscense, tell employer, have wife arrested etc).

Flyingifr:
If you are dealing with the Payday loan company itself, you do not have FDCPA protections.

If someone else called you on the phone and made those threats, what would you do? Probably just hang up on them. Why should a Payday Loan Company be any different?

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