Category Archives: Collection Agencies and FDCPA

Here is the Real Problem With Payday Loans and Why They Should Be Illegal

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I keep reading articles about cities trying to regulate payday loan companies with land use restrictions and other measures. While that is great news I cannot help but think payday loan companies should just be illegal altogether. States like California should just revoke payday loan companies’ corporate status and cities should revoke their business licenses. Why is it so hard to regulate what clearly is a horrible business model for those who are the consumers facing financial difficulties?

What Happened to the Time Honored Ways to Get Short-Term Money?

There have been time honored ways to obtain short-term loans when things go sideways. The first is primarily friends and family members that do not charge immoral interest rates and work with their relative or friend to get paid back. The second way is pawn shops that also do not charge immoral interest rates and are highly regulated. A third option is getting an advance from your employer. These are the time honored ways to get short-term money to get by. Today, payday loans are charging people immoral interest rates and making matters worse for people who obtain the loans. I have witnessed an interest rate of 1,000% in writing from a payday loan company. How can this be legal?

The Real Problem: People/Customers Who Get Payday Loans Have No Voice

What do I mean when I say they “have no voice?” It means justice is not free and you have to have money to get justice in this world. Sorry if this is the first time you have been told this, but it is the cold hard truth. Bankruptcy attorneys and attorneys in general can less and less go out on a limb and take cases on for a contingency fee. Even in contingency fee agreements the expenses for the litigation of the case are paid for by the client normally. Do you know how much it costs to sue for your rights being trampled? In San Mateo County the filing fee for a limited civil lawsuit ($10,000 or less in damages alleged) is $240.00 plus serving the lawsuit on the party you are suing. There are ways to serve the summons and complaint for free. Did I hear someone say small claims court? A small claims court complaint costs $181.00 to file in San Mateo County. Yeah, well, that is an option, but I have not witnessed people actually following through with doing it themselves and then enforcing the judgment to get paid if successful. Remember you do not just get a check when you get a judgment. You have to then spend time and money to satisfy the judgment. If someone is getting a payday loan they do not have the money for any of this and probably do not have the time either. How does someone take a day off from work or more for small claims court to just reduce their income further causing more hardship?

What happens when the person does not pay on time? The payday loan company violates the law when attempting to collect the debt. They harass people at work, tell them they are going to be arrested and they will go to jail, call their family members and harass them. What do people do when their rights are violated and crimes are committed against them by these payday loan companies? Not a damn thing. They have no money so they have no voice. They are just trying to keep food on the table and a roof over their head. It just keeps going on and on like this until they get sick of it and come to someone like me. I file bankruptcy for them and now there is an enforceable order of discharge to hopefully make it all go away. No more 500% interest rate. No more phone calls. No more harassment of their relatives. No more phone calls to their work.

Payday Loan Companies are the Worst When Trying to Collect

But wait, it actually does not stop there sometimes. I can tell you as a bankruptcy lawyer that the most likely creditors that mercilessly harass our clients long after an order of discharge is entered are payday loan companies and their collection agencies. Just like clockwork while I am writing this article I received a phone call from a client that we filed chapter 7 bankruptcy for about two years ago. She received a harassing phone call from a collection agency. When I say harassing I mean the person was yelling at her and being very rude. She received multiple calls at work and on her cell phone. She was told that she has two felonies against her and she would be put into jail if she did not pay them $1,900.00 immediately. I have read there are people impersonating the Internal Revenue Service doing this same thing. In this case though the collection agency was collecting a debt for guess who? It was a payday loan company. So the payday loan company fully knowing the debt was discharged in the chapter 7 bankruptcy case sold/assigned collection of the discharged debt to this ruthless law breaking collection agency. It happen all the time and more often than not the original debt was from a payday loan company.

Should I Pay A Collection Agency?

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The question, “Should I pay a collection agency is?” is a common question. There is no easy answer though. A collection agency purchases a debt, is transferred or assigned the debt for collection from original creditor. How much they paid for the right to collect the debt or how of the debt are they entitled to is always a question. Generally most collection agencies want to obtain some sort of payment for as little work as possible.
What is as little work as possible? Well there are many reputable collection agencies that do not resort to violating the FDCPA (Fair Debt Collections Practices Act) when attempting to collect a debt. They do not call you at every hour of the day or threaten to put you in jail.

Unfortunately there are quite a few that use harassing phone calls and intimidation tactics to try and make you pay. You can sue a collection agency for damages if they violate the FDCPA. You can receive up to $1,000 in statutory damages plus attorney fees and costs. You may also receive damages for emotional distress, lost wages, loss of consortium and punitive damages.

There are many violations of the Fair Debt Collections Practices Act. Collection agencies should not call you before 8:00 a.m. and after 9:00 p.m. They cannot harass you by calling you continuously all day. No contact should be made with a third party disclosing that you owe a debt to them. A collection agency can contact a third party to ask about your location and nothing more. After the initial contact with the third party the third party should not be contacted again to ask about your whereabouts. If you receive calls at work and then tell the collection agency that you are not allowed to receive calls from them at work they should not call back. Disturbing you at work is not only embarrassing but can lead to termination of employment if you productivity is significantly affected.

A debt collector cannot belittle you on the phone or lie to you to induce you to make a payment. The truthful and hones collection of a debt is always allowed, but deceptive collection practices are not. You will know when a debt collector is not speaking to you correctly or doing something the is against the law. You will feel it. Give us a call toll free at 1-877-963-9543 to discuss your circumstances and determine if you have a claim for damages.