Consumer Blog

Payday loan checks are not "bad checks" - exception

Missouri consumer writes:

What do I do if I owe payday loans and closed my account. Will I go to jail?

This is a good point. I blogged a few months ago that a payday loan check is not considered a bad check under state law, even though it's usually written without sufficient funds in the account. However, there is an exception. State law says this protection does not apply "if the person's account on which the instrument was written was closed by the consumer before the agreed-upon date of negotiation or the consumer has stopped payment on the check." At that point, you're looking at a good-old fashioned bad check case, which is defined in Chapter 570.120, RSMo.

Technorati Tags: bad checks, payday lending, payday loan, moagoconsumer, consumer protection

Posted by Travis on September 27, 2007 5:00 pm :: Comments (7) :: Permalink

7 Responses to "Payday loan checks are not "bad checks" - exception"

Ann says:

November 2, 2007 4:28 pm

Ok, here's the awful truth...I have five payday loans and recently had to close the checking account they were written on because there was fradulent activity on my account and someone tried to draw out funds without my authorization. One is for 517.50, another for 595, one for 575, another for 360 and one for 587.50. Every time I got ready to pay one off, something else came up and now I am in the spiral of debt. Only one is past due on the interest payment, but the others come due this week. I recently put my unsecured debt into a debt management program and I thought I could add those to that, but I can't. From what I understand, I could be charged with criminal charges because I closed the checking account and the amount is over $500. I don't know if they will work with me as I haven't had contact with them. What should I do? Wait for the collections process to start? Contact an attorney about settling these? I cannot be charged with criminal charges because that might affect my job.

Denotes the author of this comment is employed by the Attorney General's Office

Travis says:

November 6, 2007 10:08 am

To Ann:

You can file a consumer complaint with our office. Payday loan companies will often negotiate the amount due in these situations.

raymond says:

December 27, 2007 3:17 pm

i have five payday loans and can only pay two this payday and pay two next payday cannot renew my bank account was closed two will be on time and two will be two weeks late and the fifth is over the internet tried to make a deal with last two and told them my situation and they told me they was going to send it to the closed account should i prepare for legal counsel or just focus on paying them off

Eric says:

February 14, 2008 8:19 pm

I have 7 payday loans on top of moe unsecured debt. So i contacted a debt settlement company who told me to close my checking account and let them settle my payday loans. If I do that can i face criminal charges for closing my account that the payday loans are on?

Travis says:

February 19, 2008 3:27 pm

To Eric:

See the part in quotes in my original blog post above.

Brandie says:

January 23, 2009 6:44 pm

A two year old payday loan is now back in front of me. I thought it was taken care of but apparently not. the account the check was written on was closed by the bank because I overdrew it and could not pay off my overdraft protection on time. The payday loan place is now trying to get criminal action brought against me. I didn't close the account. Should I hire an attorney??