Share post
Debt Consolidation Forums Payday Loan help forums

What to do when illegal payday loan lenders trap you

Many a times, people take out payday loans without having any idea about the state rules and regulations. If you're one of them, then check out the payday loan laws in your state as soon as possible. Once you check out the laws, you'll come to know that all the lenders are not legal in your state.

Take for instance, you've obtained payday loans from the companies like VIP Loan Shop, White Hills Cash, Blue Thread Lending and Zip 19. None of these lenders are legal in this state. As such, you've to payback the principal amount only. In addition to that, you'll have to take a couple of other steps as well. Read along to know about them.

3 Steps you need to take to get out of the debt trap

Here are the 3 steps you can take when you wish to get out of payday loan debt trap.

Have a talk with the banker: Discuss with the bank relationship manager about the steps to close the bank account. Now, you may face some problems in closing the bank account under the following circumstances:

  1. Your paycheck is directly deposited into your bank account
  2. The bank does not want to close the bank account

In these cases, you may request the bank to put the account into deposit only status. Just inform the banker that your account has been compromised and you wish to revoke the ACH authorization. There is no need to tell about the payday loans in details. All you need to inform is that the lenders are withdrawing more than they ought to.

Ask your employer to issues paper check till you're able to move it to a new account. Even if you don't close the old account, make sure there is no link between these 2 accounts.

2. Pay back the principal amount: As per the state and federal laws, you're not legally obligated to pay interests and fees to the illegal lenders. You just need to pay back the principal amount to the lenders. Send the original amount to the lender and inform him that you won't make further payments.

Send a mail or a letter to the lender as soon as possible. Inform him that you've discovered the fact that the loan is not legal in your state for the following reasons:

  1. The lender doesn't have any license in the state
  2. The lender is not following the state laws
  3. Payday loan business is prohibited in your state
  4. The lender is charging a very high interest rate

3.Have patience and work with the bank: You may have some troubles with your bank. Have patience and cooperate with the bank managers. You may face some problems initially. Try to solve them before you receive your next paycheck.

Finally, calculate the exact figure you've paid till date. If you've paid more than the original amount, then ask lenders to give you a refund. You can get the contact details of lenders from their official websites. Send a mail to these lenders and ask for a refund.


Don't just sit back at home after closing the bank account. Find out the status of your old account on your bank's website. This will help you know if the bank account has been closed permanently.

VIP Loan Shop, White Hills Cash, Blue Thread Lendi...
member profile picture
Posts: 11
Credits: 0

VIP Loan Shop, White Hills Cash, Blue Thread Lending, and Zip19. Also, I live in Arizona. I really appreciate any help you can give me.

 All of your lenders are illegal. So you owe principal only. Don’t pay them an extra dime other than the principal. Ask them for a refund if you have overpaid them. Close down your old bank account and open a new one.

Sub: #1 posted on Mon, 01/07/2013 - 21:27


Follow the link in my signature below on how to deal with unlicensed illegal lenders step by step by OhioGal. How much did you borrow and how much have you already paid - you are only morally obligated to pay back principal.. Are these the only ones you have? 

Sub: #2 posted on Tue, 01/08/2013 - 05:46

HelpinAZ HelpinAZ
(Posts: 1873 | Credits: )

Thank you for your answers, just knowing that gives me some relief. After reading many posts, I understand the importance of closing my bank account, I only hesitate because I receive my paycheck through direct deposit. Do you have any advice on how to handle that?

Sub: #3 posted on Tue, 01/08/2013 - 08:57

cornfed cornfed

(Posts: 11 | Credits: )

Glad to help - keep us posted! As for the DD issue see if they can shut down your DD and issue a paper check until can get rerouted to new account.. Or have your bank restrict your current account for deposit only - due to it being compromised and you are revoking your ACH  authorizations. They should be able to put on deposit only status until the DD clears and then just move it to the new account for you - Make sure the new account is not linked in any way.. You don't have to tell them that you have payday  loans - just that you had authorized ACH and that they are taking more than owed and you are needing to revoke ACH and you wish to have account put on compromised resticed hard lock allowing deposit only and that you wish to open a new one not linked to old.. simple.. I bank with Chase and had no problems.. 

Sub: #4 posted on Tue, 01/08/2013 - 10:23

HelpinAZ HelpinAZ
(Posts: 1873 | Credits: )

Your detailed response is extremely helpful, thank you so much! Tomorrow, I will go to Bank of America and do exactly as you said. After that, I will follow the steps by OhioGal. I'll report back with updates. Thanks again!

Sub: #5 posted on Tue, 01/08/2013 - 15:16

cornfed cornfed

(Posts: 11 | Credits: )

Keep us posted - we are here to help in any way we can.. 

Sub: #6 posted on Tue, 01/08/2013 - 17:50

HelpinAZ HelpinAZ
(Posts: 1873 | Credits: )

Well I just left Bank of America. The person I spoke with was not helpful at all. He talked like he'd never heard of revoking ACH and that it wasn't possible. He kept talking about doing stop payments even though I said that is not what I want to do, I want to stop ACH. Would it be worth it to go to another branch or can this been done over the phone with BofA's customer support? It was frustrating, when I said I wanted to do what you advised me to, he acted like those possibilities don't exist. 

Sub: #7 posted on Wed, 01/09/2013 - 13:32

cornfed cornfed

(Posts: 11 | Credits: )

speak to a manager tellers as they have no clue whatsoever.

Sub: #8 posted on Wed, 01/09/2013 - 13:36

paulmergel paulmergel
Moderators Cum Industry Expert
(Posts: 15514 | Credits: )

Sorry I forgot to mention that this person was not a teller, maybe an account manager or something along those lines. He had his own office which we spoke in. 

Sub: #9 posted on Wed, 01/09/2013 - 13:42

cornfed cornfed

(Posts: 11 | Credits: )

may need to speak to a bank manager.. I had no problem with Chase. Tell them your account was compromised - you are revoking all ACH authorizations and you want to close your current account or have it put on hard block for deposit only. when you open the new account it needs to be linked in no way to the other -- or since is is BofA you could just close that account and open at another bank.. jk- but if they refuse to help you, they may leave you no other choice!

Sub: #10 posted on Wed, 01/09/2013 - 14:48

HelpinAZ HelpinAZ
(Posts: 1873 | Credits: )

Page loaded in 0.348 seconds.