Not Paying a Payday Loan is NOT Criminal
Taking out a Payday Loan is a simple affair. You tell them how much you want, and they pretend that you have money in your bank account, because you have a Job.
Then, payday comes and you have other bills to pay, so you don’t pay them. First you get a polite call, then they get more aggressive, until finally, they threaten JAIL.
Should you be worried? Not even a little but. It is illegal in most states to write a check knowing that you do not have sufficient funds, with fraudulent intent. (For example: Virginia Code and Californian Penal Code.
But a Payday loan is different. You know there is no money there. They know there is no money there. If everyone knows there is no money, there can be no fraudulent intent.
Payday Loan Collectors Are Subject To The Same Rules As Other Collectors
Payday loan collectors are collecting a loan that was made for you to buy groceries, or gas, or pay the electric bill. A loan for personal expenses. A loan for family use. A loan for household expenses. That makes this a loan that is subject to the Fair Debt Collection Practices Act. And the collectors have to play by the rules. Not that they will, but they have to not be abusive or harassing, not say things that are false or misleading, and not say anything that is unfair or deceptive. You have certain rights when dealing with them, primarily to be treated with some respect.
You can even Make Them Stop.
Payday Loans Are Includable In Bankruptcy
Sometimes even good people need to file for bankruptcy. And some even have Payday loans.
Some payday lenders try to put in their contract that you will not include them in your Bankruptcy.
Some payday lenders tell you that you cannot Bankrupt that debt.
Some payday lenders just ignore the law, and tell you that they can collect anyway.
They are all wrong.
The US Constitution has a provision in it that CONGRESS has the exclusive right to set the rules of Bankruptcy. That means that you have a Constitutional right to file for Bankruptcy, and you cannot contract that right away.
The Bankruptcy code has a section on what is not dischargeable in a Bankruptcy. A check is not one of the things in that list.
The Bankruptcy code has a section on what is not stopped by the filing of the Bankruptcy. A check is not on that list.
Criminal “Bad Check” Is Different From A Payday Loan
All of them have an important element. Intent.
When you write a check at the grocery store, there is a presumption in most states that if the check does not clear, that you had the intent to pass a bad check, to obtain money, or products or services intending not to pay for them.
This is not the same as a payday loan. A payday loan is based on the idea that you HOPE that money will be in the bank when the loan comes due. Isn’t that the same as any other loan? If you had the money, you wouldn’t have needed to borrow money, you would have paid cash. (Note: paying cash is always a better choice than a loan. It just may not be practical.) When you borrow money for a car loan, you hope that you will have the money to make the car payments. When you borrow money for a credit card, you hope that you will have the money for the minimum payments, or maybe, a little bit more. When you get a payday loan, you hope that you will have enough money to pay the payday loan back.
In each of these cases, everyone knows that you don’t have the money today. Even with the payday loan.
Now there is one exception to this, that is the one thing to worry about. An account that was closed before you took out the payday loan. If the account is closed, it is a different situation. You gave them false information so they would loan you the money. But the only time this exception applies is to accounts that were closed before the loan. If it was closed after, or if it just didn’t have enough money, then there can be no crime.
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Krumbein Consumer Legal Services, Inc.
5310 Markel Rd.
Richmond, VA 23230