This is a question that comes up frequently in most states, but has been especially focused on in Texas. A recent CNN article discusses this issue in depth. Unfortunately, many payday lenders are abusing the Texas “bad check” law that was designed to prevent a person from writing a dishonest check for a product or service that they know they didn’t have the funds for. This law was *never* meant to include any form of lending activity, but payday lenders have been exploiting this law to lodge criminal complaints against borrowers who are unable to pay back their payday loans. Unfortunately, many prosecutors in Texas are not thoroughly reading these complaints that are being filed by the lenders and are allowing the charges to slip through the system.
The law says “NO”, but unscrupulous lenders have tried anyways
This is incredibly alarming and USA Express Loans condemns these actions in the strongest terms. Under no circumstances should a borrower ever be arrested, prosecuted, or put in jail because they are unable to pay back their loan. Lenders only have two legal recourses under the federal law for debt collection. First, they may call, email, or send you letters demanding payment for your debts. Secondly, lenders may sue you in a civil court in order to collect on a payday loan. Civil court is VERY different from criminal court. A civil judgement can never result in jail or prison time, and does not result in a criminal record. If the lender wins in court, a civil judgement for an unpaid debt is legally binding, but generally all that it requires is that you pay the amount owed (as per the loan agreement) and the costs of legal fees/debt collection fees. Many judges will help create an “installment payment” plan that the debtor can afford.
Compliance is key; what we do to ensure our visitors aren’t linked to these lenders
The network of lenders that USA Express Loans links our customers to is very extensive. We regularly conduct an audit of this network to ensure that the lenders are in compliance with applicable laws, that they are operating in a moral and ethical manner by providing clear disclosures of the terms and conditions of their loans, and using fair debt-collection practices which do not include any threat of jail time.
One of the greatest parts about living in the United States is that federal and state laws all prevent what is commonly referred to as a “debtor’s prison”. In short, this means that no person shall ever be imprisoned for a debt they owe to a private party. According to this article in USA Today, the American Civil Liberties Union (ACLU) has recommended that state and federal legislators prevent courts from issuing arrest warrants for debt collection cases in which a debtor is unable to comply with the terms of the civil judgement. We fully support these measures and believe that they are key to maintaining a free and prosperous society with life, liberty, and justice for all.