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Can a payday loan provider go after me for felony fraud charges?

Parker, CO |

I defaulted on a payday loan (not on purpose, due to financial issues) and they are claiming that they will charge with felony criminal fraud if I don't pay the entire amount of what they claim I owe them. This was from back in 2005 and I've never rec'd any correspondence from them regarding this. Also, I am currently working to establish payment plans with all collection accounts I have on my credit report and this is not one of them. Can they do this even though I offered to set up payment arrangements that they claim are not acceptable? Also, they have talked about $1000 in fees to the original amount.

Attorney Answers 3

Posted

One of the important things about our legal system that creditors and collectors too often "forget" is that the criminal legal system is separate from the civil legal system. That you owe money is a civil matter. Assuming you contracted for the obligation, they can sue and, if the statute of limitations hasn't run, they can get a judgment against you. Only the state's attorney (called county prosecutor or district attorney in some places) can pursue criminal charges against you. Before you agree to pay anything to this overreaching creditor, you owe it to yourself to consult with an experienced consumer or bankruptcy attorney. You can get precise advice regarding the payday lender's ability to collect and you might learn about important consumer rights. For instance, it would be a violation of the federal Fair Debt Collection Practices Act for a collection agent to make the threat you have described. Possibly your state's consumer protection statute prohibits the same conduct by creditors collecting their own accounts.

Best wishes for a favorable outcome, and please remember to designat a best answer.

This answer is offered as a public service for general information only and may not be relied upon as legal advice.

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Posted

They are subject to the Fair Debt Collection Act and they are violating it by threatening you with criminal charges. Only a criminal prosecutor can file charges. They have no control over that and can not claim that they can charge you or have you arrested for criminal conduct. You can report them to the BBB or the Attorney General for this violation. Tell them to stop contacting you or that you will sue them for violating the act. Their recourse is to sue you for breach of contract.

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3 comments

Paula Brown Sinclair

Paula Brown Sinclair

Posted

On what basis is a creditor collecting its own debt subject to the FDCPA, counsel?

Stephen Clark Harkess

Stephen Clark Harkess

Posted

The original creditor is not subject to the FDCPA, but this is almost certainly NOT the original creditor making these calls on a loan from 2005. It is almost certainly a collection agency who is subject to the FDCPA.

Paula Brown Sinclair

Paula Brown Sinclair

Posted

The asker is not clear on what entity has made the threat. Mr. Leroi advises that the FDCPA has been violated. That may be true, but we don't have enough information to know. If the threat was made by the original creditor, the behavior may be illegal under the state's consumer protection statutes. In many states the FDCPA is mirrored and extended to creditors collecting their own debts.I wil reiterate my strong suggestion to consult with local counsel experienced in consumer matters. Your advice to document the contacts, Mr. Harkess, is very sound. I would add that the documentation should include recording any phone conversation with the creditor/collector as I understand Colorado to be a one-party consent state for phone recording. Nothing proves the illegal threats more convincingly.

Posted

Collection agencies who specialize in collecting payday loans often throw around threats of prosecution, warrants, or other serious charges in order to pressure debtors into making payments. Not only are these threats fales, they are VERY ILLEGAL. Such threats are clear violations of the Fair Debt Collection Practices Act.

They cannot charge you with a felony. They cannot issue warrants for your arrest. Further, they are not in contact with the District Attorney and the D.A. will not pursue criminal charges. While writing a check on an account with insufficient funds and passing it off as a good check is fraud and can be prosecuted criminally, this is not what happens when you get a pay day loan. The check you gave the payday lender was a post dated check that everyone knew was not good at the time you wrote it. You did not misrepresent anything.

You can, and should, call my office or another attorney who handles FDCPA claims. You may be entitled to compensation including statutory damages of up to $1,000, actual damages, and attorney fees and costs. Payday loan collectors use these tactics because they work and not enough people stand up for their rights. Filing such a suit can be done with no cost to you.

In the meantime, you need to start keeping good notes. Make a note of every time you are contacted by this collection agency, who you talked to, and what was said.

You can reach Harkess & Salter LLC at (303) 531-5380 or info@Harkess-Salter.com. Stephen Harkess is an attorney licensed in the state and federal courts of Colorado. This answer is for general information only and does not create an attorney client relationship between Stephen Harkess or Harkess & Salter LLC and any person. You should schedule a consultation with an attorney to discuss the specifics of your legal issues.

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