Payday loans orange tx - Clearfield

The right to not be imprisoned for debt has been guaranteed to Texans since the adoption in 1836 of the Republic of Texas Constitution. But that hasn’t stopped some payday lenders in recent years from illegally filing theft-by-check complaints against borrowers who don’t pay up.,According to the Texas Finance Code, a contract between a borrower and a payday lender must state that “a person may not threaten or pursue criminal charges against a consumer related to a check or other debit authorization provided by the consumer as security for a transaction in the absence of forgery, fraud, theft, or other criminal conduct.”,Theft-by-check charges get involved because payday lenders often require borrowers to write one or more post-dated checks to cover what is supposed to be paid back.
If a lender tries to cash a check but cannot because of insufficient funds, the lender then files a complaint asking that the borrower be charged with theft by check. District attorney’s offices are not required to accept the cases — in fact, Texas Appleseed and others say it is illegal for them to file such charges — but the group’s investigators found that DAs often do accept them because the fees charged help financially support the offices’ “hot check” divisions.,Investigators found that in some courts almost half the theft-by-check cases were based on payday lenders’ complaints.

Baddour said that to qualify as a crime, a borrower’s action must constitute fraud, not simply a lack of funds or failure to make loan payments on time.,Southern Methodist University law professor Mary Spector said that true theft by check is much different than just taking out a loan and not being able to repay it.,She said the Texas Bill of Rights protects residents from criminal prosecution for debt but that enforcement of the laws on debt collection has been weak in Texas, allowing payday lenders to use unlawful tactics to collect civil debt.,Baddour said such tactics have been a longtime practice of the industry. “This started very soon after the payday lending industry gained its footing,” she said.,The Office of Consumer Credit Commissioner issued an advisory in 2013 saying that payday lenders “should not use a district attorney’s hot-check division simply as a means for collecting debt.”,At the time, the Texas Observer quoted CFPB director Richard Cordray as saying that ACE Cash Express used “false threats, intimidation, and harassing calls to bully payday borrowers into a cycle of debt.”,The Consumer Services Alliance of Texas, which speaks for almost 80 percent of the payday loan industry in this state, issued a statement in response to Texas Appleseed’s investigation and complaint, saying that “best-practice” guidelines prohibit their member businesses from threatening or filing criminal complaints against borrowers and that lenders are subject to expulsion from the group for the practice.,Baddour said that state regulatory agencies have received only about one complaint for every 500 abuses that her organization found.payday loans bakersfield ca
She attributed the discrepancy to the intimidation tactics of the payday industry. Additionally, she said, most customers don’t know that the practice is illegal.,Payday lenders’ theft-by-check complaints represent a cash stream that prosecutors don’t want to give up, the state consumer credit agency concluded in 2013.,Austin attorney Tracey Whitely represented a client for theft-by-check charges from a payday lender, and in that case the charges were dismissed. “The payday lenders are using the power of the courts to collect debt,” she said. “A lot of people who are afraid of criminal charges end up paying more in fees.”,Whitely said the practice of criminal prosecution also adds to the cycle of debt being fostered by the payday loan industry.
The fees from criminal cases are just piled onto the enormous fees charged by the lenders, she said.,She said there are cases when borrowers do engage in fraud — for instance, by writing a post-dated check for a payday loan and then closing the account before the check is due to be cashed.

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