I got a collection letter out of the blue recently for a check I wrote to a payday loan place in 2000. (I was young & stupid). I asked the CA for validation, and they sent me a copy of the check. The check was dated over 7 years ago, and I honestly can't remember whether I paid it or not. I never got any collection letters, never showed up on my CR or anything. I know they can't file criminal charges since it's long past the SOL for that, and they couldn't anyway since it was a payday advance / postdated check. In my state the SOL on debt collection is 5 years. Does that mean they can't sue me now? Can I insist they no longer attempt to collect this debt and never contact me again? I'm afraid they'll try to sneak it onto my credit report, even though it's been a little over 7 years. Please advise as to how I should proceed. Thanks!
In Florida. I know a check is not a written contract. But it also says the SOL for a promissary note (which is what you'd consider a check, right?) is also 5 years. 4 years for oral agreements.
A check is probably NOT a promissory note or written contract, but the original payday loan agreement probably would be. Either way, it sounds like SOL has passed. Does this check show it was presented for payment and bounced, based on the printing on the front or back? Do you have your check records back that far to show whether you paid by a different check? Is it possible that you gave this post-dated check when taking out the loan, but then paid later by another payment instrument or method, perhaps charging it to a CC, or paying an earlier CA? Did you roll this loan over, perhaps involving payments or a new post-dated check, that should have resulted in this check being returned to you?
It has an NSF stamped on the front of the check. Honestly, I don't remember anything about this check, but if I paid it would have been with a new check or cash. I don't have any records and the account is long closed, plus the bank was bought out years ago. It should be considered past the SOL then, correct? Should I just send them a letter stating it's past the SOL and to never contact me again?
Does the copy provided to you show the back of the check, and endorsement areas? It may have been redeposited, you really do need to examine the backside of the check. If ti shows a stamp for processing through the Federal Reserve, then it cleared all banking systems. If the copy doesn't show the back, then I would be suspicous. You also need to examine the dates of deposit and NSF return, make sure it was not deposited early. The bank will have records, even if it were acquired by another bank. It will cost a few dollars to research the transaction, and make a copy, but it can be done.
A check is a "draft", it is an order for one party to pay another. The "civil" legal aspect should make it fall under the 5 years SOL term (per Florida). Thinking of Florida & SOL, a question: Did all these events take place in FL? Was your bank headquartered in FL? I ask because this could effect the SOL.
The PDL contract is considered a written contract and will be used under those SOL, which is 5 years and out of stats. Also, a CA can not, of course, sue criminally for these types of accounts. Biz - We do tons of PDL collections, and we never get a copy of the back of the check, we get a cd of scanned checks which only includes the front.
Also, whoever the PDL was through, they have to maintain a database of all debtors checks that have bounced and been sold to collections, similiar to telecheck and the others.
Wow, that really suprises me, for it is the backside that really holds the processing/clearing information. I guess if no one contests it, that's fine.
We've been able to go back to where we got the accounts or the store that did the loan and get the copy of the back if need be. I should also correct myself, rarely do we see the backside of the check, I ran across one that has both sides scanned in. We get a copy of the loan application, drivers license, check, activity log, thumbprint if one was obtained.
What you need to look at is your report from ChexSystem; it is the "credit report for the banking industry. Returned/bounced checks get reported on this sytem, and this is the report a bank pulls when you open an account (checking, savings, etc.) Though it has probably fallen off by now, you should check it out.
Sounds right, I'm sure the record is avaiable for the payee that shows item retuned also. I find this PDL business intriguing, it must be a moneymaker for these "stores". Though the default rate must be high, referencing your "tons of PDL accounts", and just the nature of the business.
As in much debt collection on old debt, it appears relatively easy to produce documentation to support that there was once a debt, but harder to determine reliably that an amount is still owed.
We have a few PDL stores that we buy from, and a couple of them have the arbitration clause, it sucks! It's a ton of money for the stores that do the loans, most of the interest rates are around 250-450%. Plus once the loan defualts there is a interest on that, usually 3-5% per MONTH.
CC debt can get around state usury laws, if located in a favorable state, and PDL can get high rates in the form of fees to keep rolling over the loan, but how do they get 3-5%/month without running into state usury laws? Are these similarly out of the state of the consumer?
Im not sure how they make it happen, but a lot of the contract I see have that phrased in it. MO contracts now say the interest can not be more than 75% of the loan amount, while OK states 5%. All of the loans originated with the consumer living in that state, although, they have moved after the check bounced.
In my experience, the usury laws are pretty easy to "get around". First, usury laws are based on the "simple" interest, not the compound (which they should be...). Then there are the labels of "%fees" which call the interest a fee. Then....there always seems to be the exclusion for an "arms length transaction" where the parties agree to the terms. Then there is always playing with the terminology of the "instrument", trying to not call it a loan. I've worked with these (usury laws) in the securities business, and bluntly, there are more holes than substance. Then there is the real world fact that very few "parties" call any "lender" on them. Look what Providian did! and Citibank!
But there does appear to be a substantial difference between applicability of state law (nexus) in the case of PDLs thru businesses physically located and doing business in a state, vs. CC accounts thru companies incorporated in DE or ND, etc. and operating under the Supreme Court decision that allowed them to sidestep state usury laws. States have been able to make state law stick when the business making the loan is physically in their state and that is the customer's point of contact. Providian did a lot beyond just charging excessive interest. But they also got nailed for it, for what good it did their customers.
