debt

How to handle payday loan harassment

Justin HarelikDear Bankruptcy Adviser,
I have a company threatening me with a bench warrant. I believe it is from a payday loan I got a long time ago. They call me and my family. I don't even know how they got my parents' phone number. They call me at work and tell my co-workers I am a deadbeat. I am confused and upset. Can I do anything at all? This is horrible!
-- Lucy

Dear Lucy,
I agree, it is horrible. I am truly shocked by this development in the payday loan world. The first time that a client called me about these types of calls, I was livid. I tried calling the company numerous times to yell, scream and threaten them with lawsuits.

I soon learned what you already know: There is nothing to be done about this. At least nothing you can do to go after these illegal actors.

I can't say for sure how this illegal conduct has been able to continue for so long without either local or federal law enforcement agencies intervening. I have my theories, but nothing I can prove so I will just keep them to myself.

You took out a payday loan at some point in the past few years. You then defaulted on the scheduled payment. The lender tried to collect, but to no avail. It then sold or transferred the account to a third-party debt collector.

The third-party debt collector is usually an offshore company or a company that moves around and has no fixed location in the U.S. The collector will call you and do skip traces to find family and friends.

The debt collector says one of the following to you. He or she will also say a variation of the same thing to your friends or family:

  • I am on my way to the court to serve you with a lawsuit for bank fraud. You will go to prison for this.
  • I am sending a local sheriff to your house today to arrest you for bank fraud. You bounced a check and now you are getting arrested.
  • I have a judgment against you for bank fraud because you bounced a check. Even if you filed bankruptcy, you can't wipe this out because you committed fraud.

All of this is untrue.

While the calls to friends and family might not end, you can stop the calls to yourself. You merely have to be strong and say to the debt collector that you know he is a fraud. You know he is not going to do anything, and you know he is going to keep calling.

Just say, "OK, I understand. Sounds serious, but I don't believe you. I know this is a scam. I assume you will be calling me a lot, but I know you are not going to do anything. I guess we will be talking again tomorrow."

Period. All my clients that say this tell me that the collection calls stop. The collector is trying to scare you into paying. Once he or she realizes you are not scared, he or she moves on to the next victim.

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