Got a call from someone in Indiana saying that someone took out a payday loan and listed me as a reference, They said that I owed them in the range of $700 and they were letting me know that I could talk to an arbitrator right then and there to negotiate a settlement, or being put on notice that 2 charges were going to be filed against me in court. They wouldn't give me any details over the phone besides that because "attorney's will hold that to the last minute to get the most they can."
Debt Collection Attorney
Not unless your spouse is the one that owes the debt or you guaranteed the loan. A reference is not a guarantor. Did you get the name of the collector, the debt collection company and phone number? If it's not a scam, the debt collector is in violation of the FDCPA. They can't misrepresent they'll sue you when they aren't able to. You should contact a local FDCPA attorney to file suit on your behalf. It should be free because the debt collector is required to pay the successful plaintiff's attorneys' fees and costs.
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The information provided in this answer does not create an attorney-client relationship and is not considered to be legal advice. Mr. Leroi answers questions on Avvo because he strongly believes in public service from his years as a judge, magistrate, and prosecutor. If you need to ask any follow up questions because my answer did not fully address your question, feel free to call Chris or post an additional question. Thank you.
Chapter 11 Bankruptcy Attorney
If I hadn't seen such nonsense, I'd think you were making this up. But I have.
It's possible that there isn't even a loan.
No, you are not liable on a loan for being a reference. This is a scam.
Chapter 7 Bankruptcy Attorney
This is certainly a scam unless this was a spouse or you co-signed. I highly recommend that you contact your local consumer affairs or Attorney General's office. In my state which is Washington, our Attorney General's Office Consumer Protection and possibly the Department of Financial Institutions will take your information. They keep tabs on these issues fairly closely. For private representation you should contact an attorney.