Ask the County Law Librarian – Can you be arrested for failing to pay back a payday loan?
Q. A few months ago, my father took out a payday loan, but he wasn’t able to make all the payments. They had it set up to automatically withdraw from his bank account, but they payments were so high, it overdrew his account a few times, and the bank closed his account. Now a bill collector is calling him all the time. The past few calls, they’ve been telling my dad that they have a warrant, and if he doesn’t pay immediately, the sheriff is going to go to his work and have him arrested. They said he committed fraud by getting a loan he never intended to pay back. My dad works part time at a school, and is scared that he’s going to be arrested in front of the kids. He’s so scared of being arrested, he won’t even leave the house. My dad did intend to pay back this loan, he’s just having a hard time financially right now because his hours have been cut back. Can they really arrest him?
A. Oh, dear! Your poor father! He doesn’t have to put up with that! First of all, you cannot be imprisoned for debt. California Constitution Article 1, Section 10. Only the State, through the District Attorney, can have anyone arrested and charged with fraud, and the felonious intent required to sustain such a charge is very difficult to prove. Second, your father should be able to put an end to that horrible harassment with a letter to the creditor and a phone call to the Attorney General. Let’s address each of these in turn.
No private citizen, bill collectors included, can get a warrant and have the sheriff arrest you for fraud. Only a court can issue a warrant, and only the State can prosecute you for a crime. To get a warrant for your arrest the District Attorney must prove to the court issuing the warrant that they have probable cause to believe you may have committed a crime. To prove that your father was guilty of “Theft by False Pretense” (a legal term for fraud) in this situation, the District Attorney must prove, beyond a reasonable doubt, that:
1. He knowingly and intentionally deceived the bank by false or fraudulent representation or pretense;
2. He did so intending to persuade the bank to give him the money;
3. The bank let him have the money because the bank relied on the representation or pretense;
4. When your father got the money, he intended to deprive the bank of it permanently.
Proof that a representation was false is not enough by itself to prove that a person intended to deceive. Proof that a person did not perform as promised is not enough by itself to prove that the person did not intend to perform as promised. See California Criminal Jury Instructions, Theft and Extortion, §1804, Theft by False Pretense.
A bill collector could sue your father for breach of contract and civil fraud (California Civil Code § 1572), but they cannot have you arrested, only ask a court for damages. If this happens, your father would receive a summons and complaint, which he would need to answer in 30 days. If this happens, have him come to the Law Library at 8:30 a.m. Monday through Friday, so he can participate in the random lottery for an appointment with our Civil Self Help Center, where staff can walk him step-by-step through all of his options and through the process of answering the complaint, if that is what he decides to do. There is no reason to come earlier than 8:30 because it is not first-come, first-served, but you don’t want to be late and miss the lottery!
As for the bill collector’s harassment, your father can demand that the collector stop contacting him by writing a letter asking the collector to comply with Federal Fair Debt Collection Practices Act (15 U.S.C. §§ 1692-1692p) and California’s Rosenthal Fair Debt Collection Practices Act (Civil Code §§ 1788 et seq.). This bill collector sounds like he is breaking most of the rules! A collector’s communications with you:
• Must be at a convenient time, generally considered between 8am and 9pm, unless you agree to other times.
• Must not be at work, if your employer prohibits these types of calls.
• Must not be harassing or abusive, such as making threats, using profane language, or contacting you repeatedly.
• Must not include false or misleading statements, such as claiming to be a law enforcement agent or attorney, falsely stating the amount you owe, claiming you’ll go to jail if you don’t pay the debt, or misrepresenting your legal rights.
• Must stop, if you send a letter asking the collection agency to cease and desist calling you.
We have a sample letter you can download on our website, along with a lot more information, such as how to make a complaint to the California Attorney General, at http://www.saclaw.lib.ca.us/pages/cease-desist.aspx .
Your father could also sue this nasty bill collector for violations of these Fair Debt Collection Practices laws, or, if they sue him for the loan, he could use the affirmative defense of "recoupment" and get up to $1000 per violation of the laws, which can be used to offset the amount owed.
Please tell your father to write them right away, and to call the California Attorney General!
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