PDL's in collections...info and C&D letter

Is a collection agency contacting you regarding a PDL? If so, there are a few things to consider.

First of all, you need to figure out A) if the debt even exists and B) if it is legal/enforceable.

Most legal payday lenders will come after you in another way before just selling the debt to an outside collector. That is why it is extremely important to remain weary when dealing with a collection agency claiming you owe money on a payday loan.

Part A from above is the first question. I highly suggest you google the company name of the collector. In MANY cases just taking out a payday loan or even ordering a pizza and having your number sold gets your information put with these bottomfeeders. They are not collecting on an existent debt if they are threatening to A) arrest you, B) physically harm you, C) suspend your driver's license or D) suspend your social security number. Those are the top 4 common things stated by bottomfeeder collectors. In 90% of the cases these companies are not even real collection agencies, i.e. they are just a bunch of people sitting in a boiler room calling you. Here is a dateline documentary on them for your educational/viewing pleasure - http://www.youtube.com/watch?feature=endscreen&v=jwrFy2bMn5Q&NR=1
Many times, simply googling the phone number or the name of the agency will help you determine it's nonexistant debt from an illegal bottomfeeder.

Now, if you've determined it's a real collector trying to collect a PDL, the next step is to review and see if payday loans are legal in your state. You can view this thread on our site- Is my payday lender illegal in my state? - You can also post on our site for information regarding a lender. Any lender that is located on a tribal reservation or offshore is illegal in any state regardless of the payday lending laws in your state. If you've determined that the collector is legitimate, and the loan is legitimate, before paying a cent to the collector I suggest you call the original lender and verify placement with the CA calling you. Otherwise we will move on to the most likely scenario - the lender is illegal making the loan unenforceable, but the CA is legitimate.

Many collectors will try to claim that since they own the debt now, it is irrelevant if the loan is illegal or not. Unfortunately they would be lying. The contract is unenforceable no matter who the loan is sold to. To make it simple, the original contract is the paper they are collecting on, and it is dirty. The fact of the matter is, you have no moral obligation (and certainly no legal one) to pay a collection agency collecting on an illegal debt. It is no longer a matter of returning the principal balance to an original creditor to morally repay the debt. It is a matter of an agency trying to scam you.

If and only if you have determined that the loan is illegal, what you need to do is not send a validation letter, but a cease and desist. There is no point wasting your time and money sending a DV letter to a collector about an illegal loan. The cease and desist MUST be sent certified mail, return receipt requested. Not registered mail, no delivery confirmation. You need to shell out the 3 or 4 bucks and send it certified return receipt requested. If the collector contacts you after the date that green piece of paper you get back in the mail was signed, then you can sue them for an FDCPA violation.

A sample cease and desist letter with regard to illegal payday loan debt is below, parts of it (especially the closing!) courtesy of soaplady.

The majority of collectors will provide you with a reference/account number of some kind that you would have with them. You need to also specifiy the name of the original creditor. You would write this as a normal business letter. If you do not know business letter format you can find a template online, this forum is not for that.


Dear (name of collector),

I am writing in reference to (name of collection agency) account number (insert account number). I hereby demand you cease and desist ALL contact with me, and anyone associated with me, including friends, family, and coworkers regarding account number (insert account number), original creditor (insert name of illegal lender).

IF YOUR STATE PROHIBITS PDLS:
I live in the State of (insert your state) and pay day loans are prohibited in my state. Thus, you are collecting on an invalid debt and I am quite sure you are aware of this. Any further communication from you to me or anyone associated with me in regards to this illegal debt will be taken a a violation of the FDCPA and I will not only report you to the FTC and my state AG, but I will take legal action against you.
[COLOR=Blue]IF THE LENDER IS TRIBAL/OFFSHORE:[/COLOR]
The original creditor is located (offshore/on an indian reservation) making the contract null and void. Any further communication from you to me or anyone associated with me in regards to this illegal debt will be taken a a violation of the FDCPA and I will not only report you to the FTC and my state AG, but I will take legal action against you.

CLOSING FOR ALL LETTERS (nice slap in the face to the bottomfeeder!) - THANK YOU SOAPLADY!

Govern yourself accordingly