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Question: I tried to renegotiate an online payday loan. I did not get any response until today, when I got a phone call from an outside party, who said that if I don’t pay $900 tomorrow, a warrant will be issued. Can they do that?

Answer: No. A debt collector or a lender saying that they can have a warrant issued is not telling you the truth. This is done in an attempt to have you pay an amount that you do not necessarily owe, by pressuring you. You do not have to submit to such pressure.

It is entirely possible that this business got your name out of thin air, or through a search of records. They may have no right at all to collect anything from you, and have targeted you for a threat which sounds scary and believable, but is in fact a total fraud.

In any event, threats of warrants and the like are (almost without exception) false. In debt collection cases, the only time when a person may be detained is when they fail to appear for court hearings that they are ordered to appear at. Such a result only would come after a lawsuit has been filed and pending for a number of months, and only after you have been given notice of the need to appear. The situation you have described would not result in a warrant being issued, by any means.

The first thing you should do is to get in touch with a lawyer, who can take down all of the details and discuss things in depth with you about your situation. You may be asked to provide information about the lender, or the debt collector, or both (including the name, address, phone number, and any paperwork you have regarding the loan). The lawyer will want to see this information in order to evaluate it.

If the threat came from a third party debt collector, it violated the Fair Debt Collection Practices ACt.

You should not answer calls from this business at all. If you do happen to answer the phone, agree to nothing with this business (as such agreements may be taken as admissions that you owe this company something); instead, insist that any further communications be in writing, and that they prove that you owe what they say you owe.

If this is a lender (and not a debt collector), insist that any proposal be in writing, and that it be sent to you by mail. They may say “we will send you something if you agree to pay or settle this right now.” Do not agree – insist that anything be given to you in writing first.

If this is a debt collector (that is, a business that is not the lender of the online payday loan), dispute that you owe the debt, and ask them to provide the business’s name and address. Then, write to them saying that you dispute the debt and that you refuse payment until they verify the debt. This is your right under federal and state laws governing debt collection. If they say “we will give you our address if you agree that you owe us money and are willing to pay us,” do not agree.

Finally, keep in mind that online payday lenders are (very often) not properly licensed by state authorities. Illinois, for example, requires lenders to obtain a license before making payday loans. Many online lenders ignore this requirement, and ignore the restrictions placed on lenders under Illinois law. These laws may give you relief from the loan, as illegal contracts are generally unenforceable. (We believe that this is true even if there are “choice-of-law” provisions in the contract designating the law of a different state – or even a different country – as the law (as written by the Legislature) has prohibited attempts to evade the statutes by any means.) There are also very substantial penalties for unlicensed lenders that make loans, such as double the interest collected or contracted for, and return of any principal paid.

In any case: get in touch with an attorney as soon as possible.

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