Can I be arrested for not paying a loan?

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Can I be arrested for not paying a loan?

I got a call yesterday that I owed an online loan; they said I owed $787.23 from a year ago. I called my bank and checked to see if I had a deposit that fit the amount. They said that I took out $300. I had taken out 2 other loans from 2 different companies. However, I called and they were paid in full. The person on the phone told me that I would be arrested if I didn’t pay him at that time. Is this true?

Asked on February 16, 2014 under Criminal Law, North Carolina

Answers:

Brook Miscoski / Hurr Law Office PC

Answered 7 years ago | Contributor

From your question, I believe that you have taken out payday loans. You gave a check as security, and intended to pay in full, and proceeded to make payments. Right now there's a disagreement about whether you paid in full.

Debtor's prison has been outlawed throughout the U.S. for a very long time. When a creditor threatens to have you thrown in jail for failure to pay a debt, that threat SHOULD BE illegal and SHOULD BE punished by law as a serious offense against debtor's rights.

However, what's happening here is that usually a payday loan borrower leaves a check as security with the lender. Later on, if the borrower can't pay, the lender claims that there has been check fraud, which is a criminal offense. The lender files complaints based on check fraud to pressure the borrower, and makes threatening phone calls.

Whether this works in your local area is a matter of how the prosecutor sees the whole mess. In Texas, some prosecuters are smart enough to see through what is obviously a scam (treating debtors like they somehow committed check fraud in order to get the loan), but it's a difficult task for state enforcement to keep up with. I don't know what it's like in your state, but in Texas we know what's going on but it's still hard to keep up with.

So is it legitimate to put you in jail over this? No.

Is the situation new and complicated enough that you should take steps to legally protect yourself? Yes.

Additionally, Texas has a Consumer Credit Commission where a debtor can report this sort of unconscionable mafioso b.s. You should find out how to make a complaint in your state, and do it.


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