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TXGENT · 02-24-2015, 09:09 AM

Trying to help a lady get answers to the legality on payday lending in Texas.
Not a provider and does not want to be, just a play friend needing some answers.
In financial desperation she took out a short term pay day loan and not able to pay some to get an extension or able to pay the check when they present it to her bank for payment. Can she be taken to court over theses kind of loans? .

ShysterJon · 02-24-2015, 10:26 AM

Texas (and other if not all other states, I assume) have laws (called 'usury laws') that limit the amount of interest a lender can charge a debtor. The laws exist to protect consumers against unscrupulous lenders. However, "in the past decade, payday and car-title loan companies [in Texas] have used a loophole in state law that allows them to operate without interest rate limits. As a result, a payday loan for $300 may end up costing about $701 — the highest rate in the country, according to an analysis by Pew Charitable Trusts." See:

Masako Melissa Hirsch, ‘Opponents keeping up pressure on payday lenders in Texas,’ Dallas Morning News, September 27, 2014

As of September 2014, 19 cities (including Dallas) have passed ordinances regulating payday and car-title lenders. As a result, many such businesses have closed. For example, "in 2012, Dallas had 241 payday and car title loan stores; as of [September 2014], there were 177." Id. However, the State of Texas has taken few actions to rein in the practices of such lenders due to the industry's lobbying efforts.

Can the lender sue the girl? Yes, of course. As I've written here many times before, a person can be sued anytime and anywhere for any reason. A lender can certainly sue a debtor on a defaulted debt (and collect attorney's fees, as well). The lending agreement is a contract, and the parties' rights are largely determined by what's in the contract. However, the lender's rights may be limited by city, state, and/or federal law. The girl should confer with an attorney regarding her rights. Many lawyers won't charge for an initial consultation, or will only charge a nominal fee.

I've read that payday lenders tell debtors they'll be arrested if they don't pay their loans. That's false. With some exceptions, it's not a crime in Texas to fail to pay a debt. Moreover, if the lender threatens the debtor with arrest, that would probably be a violation of the Texas Debt Collection Act, which bars (among other things) a debt collector from "threatening that the debtor will be arrested for nonpayment of a consumer debt without proper court proceedings" and "threatening to file a charge, complaint, or criminal action against a debtor when the debtor has not violated a criminal law." See:

Texas Debt Collection Act, Texas Finance Code, Chapter 392, section 392.301. Threats or Coercion, subsections (a)(5) and (6).

Each instance a lender claims the defaulted debtor will be arrested is a Class C misdemeanor. Id., section 392.402. The debtor may also sue the lender and collect damages. Id., section 392.403.

However, it doesn't violate the Texas Debt Collection Act to "threaten[] to institute civil lawsuits or other judicial proceedings to collect a consumer debt." Id., subsection (b)(2).

TXGENT · 02-24-2015, 11:02 AM

Thanks for the detailed response, very appreciated. I will pass the info on. Only thing I knew was that writing a hot check someone could be arrested for and is a misdemeanor , so thought she could be since she gave them a check to hold when she got the loan.

Nicolet · 02-24-2015, 11:34 AM

I can only speak as someone who was stuck on that financial equivalent of a hamster wheel! If it were my friend and she told me BEFORE she made that decision, I would have told her NOT to do it! It was a nightmare for me, that I thought I would never wake up from.
My experience was BEFORE the usury law was passed, and it was a nightmare. If anyone is thinking about it, try to help them find another way. I finally got them paid off and I swore, NEVER AGAIN!

ShysterJon · 02-24-2015, 11:37 AM

Quote:

Originally Posted by TXGENT

Only thing I knew was that writing a hot check someone could be arrested for and is a misdemeanor , so thought she could be since she gave them a check to hold when she got the loan.

Under Texas law, it's presumptively theft "If the actor obtained property or secured performance of [a] service by issuing or passing a check or similar sight order for the payment of money, when the issuer did not have sufficient funds in or on deposit with the bank or other drawee for the payment in full of the check or order as well as all other checks or orders then outstanding." See Texas Penal Code section 31.06(a); see also sections 31.03 (theft of property) and 31.04 (theft of service). The girl didn't commit theft because the check she wrote to the lender wasn't for property or a service.

TXGENT · 02-24-2015, 11:45 AM

Another hobbyist posted this link, really confused now after reading this article, Nicolet I am sure you understand then what she is dealing with.

http://www.huffingtonpost.com/2014/1...n_6355602.html

ShysterJon · 02-24-2015, 11:55 AM

I remember reading the article from The Huffington Post when it came out in December 2014. There was also an article in The Dallas Morning News on the same issue. If an attorney hasn't already, a lawyer should file a class action lawsuit against these predatory lenders.

There is a mistake in The Huffington Post article. It states: "In Texas, bad check writing and 'theft by check' are Class B misdemeanors, punishable by up to 180 days in jail as well as potential fines and additional consequences." That's not true. Writing a bad check in Texas can be a Class C misdemeanor (like a traffic ticket) up to a first-degree felony, depending on the amount of the check (less than $20 to $200,000 or more). See Texas Penal Code section 31.03(e).

TXGENT · 02-24-2015, 12:14 PM

Thanks again Shyster Jon for the input and time, smart guy
I found out from her recently she did not even write the check out to the place, they stamped void on it and nothing was even wrote on it..
So seems they could not even present it with void stamped on it. She just said she signed a contract to pay certain amount back. Never knew could be so much of this going on. I am surprised a class action suit has not been filed for their practices.

ShysterJon · 02-24-2015, 12:23 PM

Quote:

Originally Posted by TXGENT

I found out from her recently she did not even write the check out to the place, they stamped void on it and nothing was even wrote on it.

The lender may attempt to use the voided check to make one or more automatic drafts from the girl's checking account.

Nicolet · 02-24-2015, 01:34 PM

She should close that account, if possible.

Melissa Madyson · 02-24-2015, 03:53 PM

I am only speaking from my experiences with pay day loan places so the answer I am about to weigh in on is not what may or may not happen to you in your situation or/ case.

I became single in a bad way, in 2010, and I was still working a RL job. Money was tight, and so therefore I took out a pay day loan. I found out that they were a vicious cycle of paying the interest every 2 weeks, or paying out the loan. I went from place to place using 1 loan company to pay out the other loan company. And in the meantime I still had to pay other mounting bills such as car note, rent ect.

The loan companies harassed me to no end.(they do that), I was always scared to answer the phone, for fear of the threatening phone calls. They threatened to take me to jail, garnish my wages, and all types of other harm done to me.

I do NOW KNOW, that they will put it on your credit, and that is all they can do. Yes they CAN DRAIN YOUR BANK ACCOUNT, and cause all types of overdrafts to you, so you should CLOSE YOUR ACCOUNT....

In 2010 I sued a loan company in Texas, and was on the news, and I WON my case. They settled out of court, because she (Manager of company) came to my RL job and jumped on me for $56.00 and stayed 1 1/2 hours until the police came and escorted her off the parking lot and wrote her a NO TRESSPASS order...

My supervisor at my job gave me the video, and told me to seek legal representation, and that is how I learned so much legal stuff.

When my case was settled, I was able to pay off a lot of debt, including$10,000.00 to pay off my car. I received an extra $5.000.00 just for her blogging herself on FB, bragging that what she done me was wrong and she didn't care and would do it again...

My Lawyer was Mr. (pm. me for his name) from Dallas at Founders square.

That is how I know so much about the laws regarding loan companies.

Now it is 2015, and perhaps the laws have changed, but that is what I know from my own personal experience...

If anyone wants to see my news footage on the internet, please pm. me privately, as it contains my RL name and info.

M.M.

ElisabethWhispers · 02-26-2015, 11:14 AM

Gosh, Melissa .. .that is some story!!!

I did a payday loan and it was a nightmare. And I did a car title loan once. It's all the same story. Female. Single mom. Working a regular job that couldn't cover my basics.

It was close to Christmas and I was desperate. This was before I did "this" and well, it was tough, even with a "good" job.

And boy, what the other poster said was correct. What a hamster wheel to be on.

Crap. I hated it. Legal loan sharking. I probably paid, at least, ten times what the loan was for. At least.

Just awful. IF you can pay it back the first go around, you're fine. But if you have to start paying the interest, again and again, every week or two ... it's a frigging nightmare.

To the OP ... help your friend, if you can, get off of the merry go round. She'll be fine if the check bounces. She will. But it's a real burden on your shoulders to have to deal with that.

Especially on low end "civie" wages.

ElisabethWhispers · 02-26-2015, 11:18 AM

Quote:

Originally Posted by TXGENT

Thanks again Shyster Jon for the input and time, smart guy
I found out from her recently she did not even write the check out to the place, they stamped void on it and nothing was even wrote on it..
So seems they could not even present it with void stamped on it. She just said she signed a contract to pay certain amount back. Never knew could be so much of this going on. I am surprised a class action suit has not been filed for their practices.

In Garland, Texas, they have. I don't know the basics, though. Something about not loaning someone more than a percentage of what they make. Not sure of the specifics.

Personally, I think that these payday loans, and car title loans, should be outlawed.

It's just another way to keep the poor man, poor. Only the poor have to use these services, generally speaking.

It can be SO expensive to be on the low end of the economic totem pole. This, and check cashing places, are just a few examples.

ShysterJon · 02-26-2015, 12:31 PM

The way to kick predatory businesses to the curb is to vote out legislators who accept large contributions from them. Payday lenders, car title lenders, bail bondsmen, companies that sell 'street insurance' -- all have powerful, well-funded lobbies in Austin.

Whispers · 03-03-2015, 10:28 PM

I've heard of some of these places that require the borrower to make out checks for the payments in advance.

I thought I read somewhere that if someone has actually ACCEPTED a Post Dated check that they in fact KNOW is not good at the time the maker is issuing it that courts will treat them as a creditor rather than a victim and NOT prosecute the issuer under laws relating to writing a hot check....