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Payday Loans & Hot Checks in Texas - The Bills.com Blog
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Payday Loans & Hot Checks in Texas
Friday, Nov 6, 2009
Question: A payday loan that I was making payments every month on because my account was negative, just called and acted like a second party to the collection effort. She said I had until noon to pay the balance of $732 or I needed to contact an attorney because writing a check over $200 in the state of Texas is a serious offense. She was going to contact my employer. anyway, I called the lender and found out the woman is in the collection dept for that lender. I asked if they still wanted me to make the $200 payment on the 15th but she said no I had to pay in full. Anyway, my question is ... is an online payday loan a check that can be prosecuted?
Answer: These small loans, often called "cash advance loans," "check advance loans," or "deferred deposit check loans," are a frequent pitfall for consumers. A fee anywhere from $15-$30 per $100 borrowed is charged for an average loan of $300. With rates so high and the term of the loan so short, there's no wonder that a very high percentage of these loans are rolled over by the borrower again and again so that the accumulated fees equal an effective annualized interest rate of 390% to 780% APR depending on the number of times the principal is rolled over.Texas' Hot Check law
Texans refer to checks returned to the merchant with an insufficient funds stamp as "hot checks." It is a criminal offense in Texas for a person to write a check if the person knows his or her account lacks sufficient funds to cover the amount of the check. There is an exception for post-dated checks.
Payday loans
are withdrawn directly from the customer's checking account using the Automated Clearing House (ACH) system. When the customer lacks sufficient funds for the payday lender to make an ACH withdrawal, the payday lenders state (erroneously, I believe) that this is the same as writing a hot check. I am not aware of any Texas district attorneys today who prosecute payday loan customers under Texas' hot check law -- TPC 32.41 Issuance of a Bad Check.
The district attorney must prove that not only did the customer know he or she did not have the funds at the time the check was written, the customer must have known there would not be sufficient funds in the account at the time the check would be cashed. In other words, this is a specific intent crime, and the DA must prove the defendant intended to commit the act (the check writer knew there would not be enough money in the account when the post-dated check was cashed). The only plausible way a DA could prove this type of case is if the check writer admits to a police officer or investigator he or she did not expect the account to contain sufficient funds.
The Texas attorney general offers an array of Web pages devoted to Texas consumers' rights , and specifically Texas debt law and consumers' rights in debt collection
The district attorney must prove that not only did the customer know he or she did not have the funds at the time the check was written, the customer must have known there would not be sufficient funds in the account at the time the check would be cashed. In other words, this is a specific intent crime, and the DA must prove the defendant intended to commit the act (the check writer knew there would not be enough money in the account when the post-dated check was cashed). The only plausible way a DA could prove this type of case is if the check writer admits to a police officer or investigator he or she did not expect the account to contain sufficient funds.
The Texas attorney general offers an array of Web pages devoted to Texas consumers' rights , and specifically Texas debt law and consumers' rights in debt collection
situations.
As a Texas resident, the payday loan collection agent you spoke to is bound by the Fair Debt Collections Practices Act , which among other things, prohibits collection agents from making false or misleading statements to debtors. Some Texas payday loan employees claim that as original creditors they are not bound by the FDCPA. That is an incorrect statement. See my answer to a fellow reader, "Harrassed by a Collection Agent " to gain a better understanding of your rights.
More payday loan information
I assume that you your payday lenders are contacting you because you are having a hard time repaying the short term loans you borrowed. While payday loans can help some individuals to pay one-time unplanned expenses, when consumers try to use these high-interest loans to pay everyday expenses, they often find themselves quickly overwhelmed and unable to pay. Bills.com has answered many questions about payday loans , which you may find helpful.
Also, I encourage you to visit the Consumer Federation of America's payday loan information site. This site offers state-specific information that may help you dig yourself out of the payday loan trap.
I wish you the best of luck in resolving these payday loans, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
As a Texas resident, the payday loan collection agent you spoke to is bound by the Fair Debt Collections Practices Act , which among other things, prohibits collection agents from making false or misleading statements to debtors. Some Texas payday loan employees claim that as original creditors they are not bound by the FDCPA. That is an incorrect statement. See my answer to a fellow reader, "Harrassed by a Collection Agent " to gain a better understanding of your rights.
More payday loan information
I assume that you your payday lenders are contacting you because you are having a hard time repaying the short term loans you borrowed. While payday loans can help some individuals to pay one-time unplanned expenses, when consumers try to use these high-interest loans to pay everyday expenses, they often find themselves quickly overwhelmed and unable to pay. Bills.com has answered many questions about payday loans , which you may find helpful.
Also, I encourage you to visit the Consumer Federation of America's payday loan information site. This site offers state-specific information that may help you dig yourself out of the payday loan trap.
I wish you the best of luck in resolving these payday loans, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
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1. Posted by nita on Tuesday 10th November 2009 14:26
I have 5 internet payday loans -- in the state of Texas - what are my legal rights -- I have gone with a debt consolidation agency (yourpaydayloanhelp) in hopes of getting my paycheck back to pay my monthly bills -- I am wondering my legal ramifications, etc.
2. Posted by Bill on Tuesday 10th November 2009 16:57
The Texas attorney general offers a helpful overview page listing consumers' rights in debt collection situations.