Can a Payday loan company threaten you with criminal charges?

Question Details:I defaulted on a Payday loan 5 or 6 years ago. They have been calling daily at my work. I return their calls on break and try to work out arrangements but they want $900 by the 30th. I have no way of doing that. What should I do? I am not a criminal. My husband passed away 13 years ago from cancer leaving me with 3 children at home. I did what I had to do to get them through school.

Asked 5 years ago under Collections and Debt | 28931 Views | More Legal Topics

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SJZ, Member, New York Bar | FreeAdvice Contributing Attorney Answered 5 years ago

First, people do not go to jail simply for not being able to pay for loans. If the debtor *never* intended to repay the money--if the "borrowed" it without ever intending to repay--the story might be different; in that situation, the debtor may have committed fraud. However, as long as there was an intention to repay when the money was borrowed, then a failure to be able to repay it, such as owing to falling on hard times, is not criminal.

However, depending on exactly when the money was borrowed and when you defaulted on the loan, they may be able to sue you. (If it was too long ago, it might be past what's called the "statute of limitations" and they would not be allowed to sue.) You should speak with an attorney, who can review the specifics of your situation and determine whether you can be sued, if you could be, what your best response is, and--if you are worried that there is any evidence that you did not intend to repay the loan--whether there is any possibility of criminal liability. If you can't afford one, try contacting Legal Aid; your state bar association for a referral to an attorney who will represent you pro bono (for free); or possibly a woman's or single mother's advocacy group, which may have resources or referals. Good luck.

M.D., Member, California and New York Bar | FreeAdvice Contributing Attorney Answered 5 years ago

Absent fraud (ie you never intended on paying the money back), threats of criminal action are just that, threats.  You can't be arrested for failure to pay on a debt.

Additionally, if the company calling you is what is known as a "third party collector", that is someone who bought the loan from your original debtor, then they may not call you at work once you have informed them that your employer does not allow these type of calls.  Additionally, you can also tell them not to call you at all, even at home.  In fact you should tell them this by letter as well.  Pursuant to the Fair Debt Collection Practices Act (FDCPA), if they continue to harass you by phone, you can bring a legal action against them.  If the original debtor is calling you then the FDCPA does not apply, but after so long a time it is more than likely that it is a 3rd party collector that is contacting you. Even if it is the original creditor, there may be some specific state law protection for you on this.

Note:  The FDCPA also prohibits a creditor from threatening criminal action.

As for the age of the debt, in the law there is something known as the "Statute of Limitations".  What this does is bar a creditor from bringing lawsuit against you after a certain period of time has passed.  In NE, for a claim of this kind, the S/L is 4 years.  But the limitation's period can be started anew if a debtor acknowledges the debt.  Here, if you tried to work on re-payment arrangements, I'm afraid that the statute may once again have been started.  However, what act(s) actually re-starts the S/L varies from state-to-state.

At this point, I would speak to an attorney as to all of this. Even if you can still be sued on this loan, an attorney might be more effective in working out payment arrangements with them.  They can also advise you what to do regarding any judgement that may be obtained.

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