Lately, several clients have contacted me about emails and phone calls they are getting from payday loan collectors for debts many years old threatening them with arrest and jail for check fraud. I believe that many of these companies have set up sleazy phone banks to “stir the ashes” of old debts and scare people into paying.
This is completely outrageous as it is illegal to threaten criminal prosecution to collect a civil debt. But these collectors will say anything to intimidate people to get money from them.
In reality, I have never seen a prosecution for a payday loan many years old. In fact, I have never seen a prosecution for a payday loan at all!
There is a crime called check fraud but it involves writing a check with the intent to defraud and is extremely rare in most consumer type situations. Many of the cases we file involve some bounced checks as financial emergencies that cause bankruptcies often involve problems at the bank.
But the inability to pay a payday loan because of an economic set back IS NOT check fraud, and these collectors are scaring people with no legal basis to do so. The way to fix this problem once and for all is to file chapter 7 Bankruptcy and be done with these people forever.