Many clients come to me for bankruptcy services because they have acquired one or more of the predatory “payday loans” that have an annual percentage rate of interest typically in the 400 to 900 percent APR range. So the bottom line is that we have a person who is already in financial distress taking out a loan that has an interest rate that precludes the borrower from making any headway on paying down the principal. In other words, the borrower makes very high monthly or semi-monthly interest payments, and the principal remains the same.
A practice that I am seeing quite frequently now is rogue collectors that are either operating with the consent of the payday lender, or more likely, operating without the consent of the payday lender, who are making contact with former bankruptcy clients and making outrageous statements to them regarding the payday loan. A recent client was told that “payday loans are not dischargeable in bankruptcy; that if she did not pay the loan that she was going to be charged with fraud and he was having papers served on her related to her debt.” These are outrageous lies that are aimed at putting extreme fear in the Debtor and making them believe that they have to pay the debt. Only a rogue collector would make such outrageous lies to a Debtor, because a legitimate collector that we could actually track down would be before the bankruptcy court explaining why they have violated every aspect of the bankruptcy law that is aimed at preventing such outrageous conduct.
Most of the time these rogue collectors will advise the Debtor that they are a lawyer to make them seem more legitimate. They usually cite a bogus section of the bankruptcy code, which they claim makes payday loans non-dischargeable. I do understand that the payday loan lenders are getting desperate, because they have been informred for the most part by county and district attorneys that they will no longer collect on the post-dated checks that the Debtors have generally provided to them.
If you get a call from one of these rogue collectors, then be sure to get their full name, address, telephone number with extension, name of the company they are with, the name of the creditor they are collecting for and the name of their supervisor. If they represent to you that they are an attorney, then ask them what state or states they are licensed in and their bar number(s). They probably will go away once you ask them all these questions, because again, they are illegitimate in every respect. If they are in fact legitimate and are engaging in this type of outrageous conduct, then let us know all of the information if you are a former client, or if not, then let us know if you should have any questions that we might answer.
Any opinions expressed on this website are just that, opinions. So if you have a question regarding bankruptcy or debt relief, then please give me a call to discuss your individual situation. Bankruptcy, as many other areas of the law are very case or fact specific. I pride myself on giving you the answers to your questions that are based on your individual circumstances.