The holidays are supposed to be a time of goodwill and cheer, and merriment. Yet for more than a few Texans it also means a time to take out payday loans just to make ends meet, which is sending many deeper into debt due to the high interest rates that accompany payday loans. Yet it is not just the heavy finance charges facing many of these Texans but also the treat of jail time. It seems payday loan lenders in Texas have found away around the ban on debtor prisons.
Payday loan lenders in Texas have filed over 1,500 criminal complaints in local courts against borrowers. The charges are the result of bad checks or rather the borrowers post dated checks which bounced when the payday lenders attempted to cash them. In Texas it is common practice to secure a payday loan with a series of post dated checks. Yet sometimes the unexpected happens causing these post dated checks to bounce, often for reasons beyond the borrowers fault. So the payday lenders creative answer has been to file charges for bad check writing and theft by check, often times on a Felony level and sometimes on a misdemeanor level charge.
The Texas Appleseed is a non profit organization of social and economic justice in Texas. The Texas Appleseed group has been investigating this issue over the past year and data shows that these payday lenders are using unlawful use of criminal charges to collect on past due debts. In effect the payday loan industry is using the court system as a defacto collection agency funded by tax payer dollars which should outrage any native Texan in a state that prides itself on freedom and civil rights progress.
The Texas Appleseed has sent reports to numerous state and federal agencies including the Texas Attorney General’s office and the U.S. Consumer Financial Protection Bureau. According to statistics in the report arrest warrants were issues in roughly 42 percent of these bad check cases and that jail time occurred with 5.6 percent of these cases. Talk about the high price of a loan! The law in Texas is pretty clear that when it comes to a post dated check at least criminally that if the post dated check bounces it is not a criminal act of writing a bad check or theft by check.
Lawmakers in Texas had addressed this issue in 2012 with a law stating that unless fraud was involved that lenders could not pursue criminal charges for non payment of debts, yet this is still happening 2 years after the law was enacted. Not only is it still happening but it is being enforced by the judges that the people of Texas have elected to the positions of Judges. State lawmakers and regulators are investigating the matter but it remains to be seen what if anything will come of these supposed investigations.
The Texas Appleseed insists that of the 1,500 criminal cases they reviewed since the law took effect not one of the 1,500 cases had any documented instances of fraud. Texas like many states bans debtor prisons, and this protection is written directly into the states 1836 Republic of Texas Constitution which clearly states that “”No person shall be imprisoned for debt in consequence of inability to pay.” The states bill of rights states simply that “No person shall ever be imprisoned for debt.” This is quite a serious issue and could have dire implications for the rest of the nation if this is not addressed. We will keep you informed on this issue as future developments happen.