Will I be arrested for a payday loan that I defaulted on?

Yesterday I was called from a law office they informed me that I was being sued by a payday loan company. They are charging me with fraud, stating that I gave them false bank information. I am unable to make my loan payment because I was laid off from my job. I gave the company my correct bank information I just don’t have money in my account. I informed the company that I was laid off and would make my payment as soon as I received money. They informed me that the loan would most likely go to collections. Now this law office informs me that if I don’t pay by Friday I will be arrested for fraud.

Asked on August 24, 2011 Colorado


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Unless fraud was involved threats of criminal action are just that, threats. You can't be arrested for failure to pay on a debt.  In fact, it is against the law for a creditor to threaten criminal action for non-payment. As long as no fraud was involved in your obtaining the loan, no crime has been committed. So for example, as long as you intended to re-pay what you borrowed and the loan was otherwise legitimately obtained, you cannot be arrested for non-payment. You can't be punished for losing your job. This seems is more of a case of hard luck than fraud. 

Additionally, it is illegal to threaten someone with arrest or to intimidate a debtor in similar ways. There is both against federal and state law. At this point you can speak with an attorney or at least report this activity to your states's Attorney General's office and/or department of consumer protection.

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