Debt-collectors and other financial firms, the newspaper reported, are suing borrowers over unpaid credit cards, consumer loans, auto loans and other debts.Many people report never receiving a notice of the lawsuit and end up with an arrest warrant obtained through the courts.
(Most payday loans require borrowers to provide a post-dated check or debit authorization to get the money.) The state Office of Consumer Credit Commissioner has advised the payday loan industry that “criminal charges may be pursued only in very limited situations” where it can be proven that a borrower knew a check would bounce.
The Consumer Service Alliance of Texas, a trade association representing 80 percent of Texas’ payday and title loan companies, is even more strict about the practice.
“It’s clearly established in the law that unless there’s criminal intent on the part of the borrower, there’s not an option to pursue criminal charges.” Still, payday lenders have found courts and prosecutors willing to take cases. Until debtors’ prisons were banned 180 years ago, Americans could be jailed for years for owing just a few pennies.
The costs of incarceration, though minimized by squalid prison conditions, often grossly exceeded the debts, suggesting that punishment was the overriding motive.
“I’m innocent here,” he said, “other than losing my job and an inability to pay. If my intention was to duck and dodge, why would I even call them?
” In Tillman’s case, however, the debt collectors weren’t exactly lying: He could be arrested for not paying his payday loan debt.
Worried that he couldn’t pay his bills, Tillman reluctantly went to The Money Center, a payday loan company with locations in San Antonio and Houston. The 64-year-old Houstonian doesn’t recall the exact terms of the loan, but The Money Center’s website currently offers a 0 loan at 650 percent annual interest, or about 0 in fees and interest for a two-week loan.
Such terms are common in Texas, where payday and car title lenders are allowed to charge customers unlimited fees.
When Roger Tillman lost his job, he knew money would be tight.
But he never thought he could end up in jail for being broke.
In the first two decades of the 19th century, humanitarians confronted authorities in several states with a litany of abuses, and the public came to see the practice of jailing debtors as repugnant.