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