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 listing. They call me at my job and tell my co-workers I am a deadbeat. I am confused and upset. Can I do anything at all? This is terrible!
-- Lucy

Woman stressed, seated outside © iStock

Dear Lucy,
I agree, it is horrible. I am truly shocked by this development in the payday loan realm. The 1st time that a client told 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 characters.

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 attempted 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 set location in the U.S. The collector will call you and do skip traces to locate family and friends.

The debt collector says 1 of the following to you. He or she will also say a variation of the same thing to your family and friends:

  • 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 home 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 stop, you can end the calls to yourself. You merely have to be strong and tell 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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