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Missouri Payday Loan

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Mark Cappel
UpdatedMay 10, 2024

Can a payday loan company in Missouri file criminal charges if we default?

My husband took out an online payday loan and he defaulted, they have now sent it to a collection agency that says we have to come up with over a $1000 or they will start criminal charges. Can they do that? I live in Missouri.

These small loans, also 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. The borrower will give the lender a post-dated check, which the lender later uses to electronically transfer a payment or the entire balance of the loan from the borrowers account.

An especially insidious practice is to withdraw a partial payment from the account as a "customer service." This partial payment becomes a perpetual installment that continues despite the borrowers' best efforts to halt it.

With rates so high and the term of the loan so short there is 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.

The Federal Trade Commission offers a great Web page regarding payday loan alternatives.

Payday loans and consumer rights

A payday lender may attempt to collect the balance itself. If the borrower defaults, the payday lender may sell the debt to a collection agent, which we discuss later.

If the payday lender (or collection agency, for that matter) cannot convince you to pay through standard collection tactics, such as phone calls and letters, the payday lender may decide to file a lawsuit against you to obtain a judgment for the balance of the debt. If the lender sues and obtains a judgment against you, it can then take steps to enforce the judgment as allowed by your state law in civil court. The most common methods of enforcing a judgment are wage garnishment, bank account levies, and property liens.

Note that not on this list of enforcement actions are calling your employer, contacting your neighbors, or getting a warrant for your arrest. Failing to repay a debt is a civil matter and not criminal. A common threat many payday lenders use is arrest for check fraud: This is a groundless threat unless the payday lender has evidence to prove the borrower never intended to repay the payday loan. Proving that is very difficult. Remember, no one has been arrested or imprisoned for debt in the United States since in the Civil War.

To learn more about debt collection laws in your state, see the Privacy Rights Clearinghouse Debt Collection Law Guide.

If the payday loan company sells an account to a collection agent, the borrower is now obligated to repay the balance to the collection agent.

A federal law called the Fair Debt Collections Practices Act (FDCPA) states that a third party collection agent must stop calling you if you notify them in writing to do so. Several states, such as California, New York, and Texas, extend many of the regulations in the FDCPA to cover original creditors as well. See Advice If You’re Being Harassed by a Collection Agent to learn what actions you can take if you believe a collection agent is violating the FDCPA.

If the payday loan company sells the account to a collection agent, the debtor can stop the telephone calls by sending a cease communication demand letter, commonly called a cease and desist notice, to the collection agent. (See the debt self-help center for sample cease-and-desist letters.)

How Can I Handle Payday Loan Collections?

Many payday loan collectors use intimidation to strike fear into borrowers. Just because a person is in debt does not mean that person loses their rights as a consumer.

As mentioned above, many payday lenders require borrowers to provide their checking account numbers so that payments can be withdrawn from the borrowers' accounts automatically using the Automated Clearing House (ACH). In instances where the borrower accounts lack sufficient funds, the payday lender will continue to attempt withdrawals. This may create overdraft charges for the borrower, and if done often enough, the bank may close the borrower's account.

One common tactic to deal with payday lenders who repeatedly withdraw funds from a borrower's account is for the borrower to close the account and reopen another at the same bank. This is effective unless the bank links all transactions from the old account to the new one. If that happens, when the payday lender makes a withdrawal, the bank simply reaches into the new account to remove the funds. The lesson here is to make sure the bank does not allow electronic withdrawals from the old account to be transferred automatically to the new account.

Once the account is closed, the borrower can create and negotiate a repayment plan with the lender. However, in Missouri it is a violation of state law to write a check on a closed account. See the discussion below to learn more about Missouri law.

Payday Loan in Missouri

Under Missouri law, unsecured "payday" loans must be made by a licensed lender, shall be a minimum of 14 days and an a maximum of 31 days, cannot exceed $500, and cannot be charged more than $75 for a $100 loan. Incidentally, the APR for a $100 loan for 14 days and a $75 fee is 1980%. A payday loan can be rolled-over a maximum of six times in Missouri. The borrower must reduce principal amount of loan by 5% or more upon each renewal. The lender is prohibited from making a series of ACH transactions to collect a single check.

It is common for collection agents working for payday lenders to suggest that a person who defaults on a payday loan can be prosecuted under the state's criminal law. Missouri § 570.120 1(1) in part states "with a purpose to defraud the makes, issues or passes a check or other similar sight order or any other form of presentment involving the transmission of account information for the payment of money..." In other words, it is a crime in Missouri if the payer writes a check on a closed account, or if the account was closed between the time the check was written and the agreed upon date of presentation of the check.

However, Missouri § 408.505 states that a payer does not commit the crime of passing a bad check if at the time the payee accepts a check there are insufficient funds on deposit at the time of acceptance if both parties agree the payee will present the check later.

If a Missouri payday lender is making repeated ACH withdrawals to secure repayment for a loan, that lender is in violation of Missouri loan. If a payday loan debtor closes an account before the payment is made, the debtor may be in violation of Missouri § 570.120. However, it is unclear if the debtor is in violation of § 570.120 if the debtor closes the account in response to repeated ACH withdrawals, or after the debtor has made some payments to the creditor with that account. Debtors in this situation should consult with the Missouri Division of Finance, file a complaint, and also consult with a Missouri attorney experienced with consumer law for guidance.

To learn more about Missouri lending law, see this matrix of Missouri laws regarding consumer loans. See also Missouri's Payday laws and regulations - quick reference guide document.

To learn more about tactics and strategies for dealing with creditors, read the article Debt Negotiation and Settlement Advice. also offers more information on the Payday Loan Information page, and has answered reader questions about payday loans in California, Massachusetts, New York, Florida, Texas, Illinois, and Virginia.

If you do not repay a payday loan, the payday loan company has several legal remedies, including wage garnishment, levy, and lien. See the resource Collections Advice to learn more about the rights of creditors and debtors.

See also the free Financial Planning and Budget Guide, which can help you manage your finances and you can learn about budgeting and prudent financial management.

I hope this information helps you Find. Learn. Save.



Struggling with debt?

If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2023 was $17.503 trillion. Student loan debt was $1.601 trillion and credit card debt was $1.129 trillion.

A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.

Each state has its rate of delinquency and share of debts in collections. For example, in Virginia credit card delinquency rate was 3%, and the median credit card debt was $423.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.



RRichard berry, Jan, 2021

I keep getting emails saying I'm being sued for a loan that I don't think I even got .is there a way to search Missouri data base to see if I have taken a payday loan out and from where

lleslie, Aug, 2020

I live in Illinois but have a installment loan in Missouri. I know I am going to default on this because my fiance passed away and whole financial situation has changed. What will they do to me?

DDaniel Cohen, Sep, 2020

Leslie, my condolences on your loss.

The first thing I would do would be to make inquiries as to whether the loan was proper. Though you took out the loan in Missouri, you are protected by Illinois law that regulate payday loans. Did you disclose your Illinois residency to the lender in your application?

I recommend that you read this page at the website of Illinois Department of Financial & Professional Regulation, Division of Financial Institutions, Consumer Credit Section.

There is a contact phone number in the bottom left hand side of the page.

DDalena, May, 2020

I have a loan for $2000 from a payday. I didn't realize the interest rate was 236%. My wife lost her job and I cant afford to make the payments. They sent it to a creditor now. Is it best just to file bankruptcy?

DDaniel Cohen, May, 2020

Dalena, thank you for your question. It is tough to hold things together when a job loss occurs. Here is some information for you to consider. Please keep in mind that I am not an attorney and I am not offering legal advice.

There are a lot of factors to consider. It wouldn't harm you to seek a bankruptcy consultation, but if this is the only debt that is a problem, it is probably a more extreme solution than is necessary. 

If the debt is only in your wife's name, then collection efforts would ensue against her, not against you. That means if a lawsuit occurred and a judgment against her were issued, your income would not be at risk of garnishment and any bank account with your name on it and not your wife's would not be subject to bank levy.

How quickly you expect her to find another job, the other debts and expenses you, and how aggressively they creditor is trying to collect on the debt are also important. I think doing nothing and, as is possible, setting money aside to pay this debt off is a reasoanble option.

TTim, Mar, 2020

I had a place call and say that I owemoney for a loan I guess I had but am not sure about. I don't remember, but they said it was 12 years ago that I got the loan. They're telling me that paperwork is going to be sent to the prosecutor and a warrant will be issued for my arrest. Can they do that?

DDaniel Cohen, Mar, 2020

Tim, I can't give legal advice, as only an attorney can properly do so. Here are a couple of thoughts, with the understanding that I am not giving you legal advice.

The caller is attempting to scare you into paying. It is not legal to make threats to collect a debt. This kind of debt doesn't lead to a warrant for arrest. That is BS meant to cause you to panic.  (The only way warrants result from consumer debt is if you are sued and don't show up when summonsed to provide financial records. Then, a judge can issue a bench warrant for not complying with his/her order. This doesn't apply to your situation, but if you are sued for a debt, ever, make sure to go to court.)

In Missouri, the statute of limitations on debt for a written contract is 10 years. That means if you stopped paying more than 10 years ago, you could avoid paying by using the SOL as a defense. Again, you have to go to court if that happens.

If they call again, as a proud resident of Missouri, say, "Show me!." Make sure they have your address and tell them to mail you paperwork.  Ask for the name of their company and write it down. Tell them that other than notice about the debt, you want them to cease communications.

If they keep calling, call an attorney that handles violations of the FDCPA (Fair Debt Collection Practices Act). They don't charge you a fee but will take the case if they feel they can win and get money from the debt collector harassing you. Do a search online for FDCPA attorney and the name of the city in which you live. Please report back on how things go for you!

TTerri Willis, Jun, 2017

Long story short: These people say I owe on a defaulted 300 loan-wont tell me exactly where from - only indicates they are a parent company for multiple loan companies. I asked them to verify info for me and they gave me basic info that I have read is easy for them to get. I asked for their address and phone number and won't give it to me. I tried to find them on the internet and can't find their exact info - i found something similar and I have asked for a copy of the original contract and they said this: The details you requested is the prime evidence against you, we cannot disclose it to you. We can only provide that to you in front of justice.We can provide you the collateral information which you have to provide while signing agreements and we have traced down all your information from it.If you believe it's included in chapter 7 then you can go ahead with it and come to the courthouse as a company has enough evidence against you. Also please note in mind that without any strong evidence company is not taking to the courthouse as if they lose a case against you, you can sue them thousand dollars. You might have forgotten about it. So as of now, you have 2 options. Either you come to the courthouse and prove yourselves or go-ahead to settle this with the company. Once you will make the full and final payment we will send you all document settlement completion letter along with the receipt at your mailing address. This is the best we can do for you at the current stage.

DDaniel Cohen, Jun, 2017

It sounds like someone is trying to scam you.

Any creditor making collections is required by law to provide you information concerning the debt. This is called a “Validation of Debt” letter that needed to be sent out once the debt is acquired and, at that point, 30 days are required to allow the debtor to dispute the debt if it is not theirs, or at the very least not recognized.

I recommend that you go to” (it’s a free service) and see if anything resembling this debt appears on your credit.  If it does, then the reporting entity will have contact information for the collection agency. If it appears, and you still don’t recognize it, then file a dispute with each credit bureau that is reporting it.