Posted November 12, 2009 6:41am
It sounds like you were contacted by a commission based collection agency rather than a law firm. Unless there some odd exception in your state, It is unethical for a lawyer to threaten criminal sanctions to collect a civil debt. Lawyers have been disbarred for this activity.
Did you write a bad check? If so, many states allow a local District Attorney's office to prosecute on the bad check. Depending on your state's law, criminal sanctions might include loss of driving privileges until you have made restitution on the bad check. This is something about which you should consult a local attorney.
As to the default on your promissory note for the payday loan, yes a civil judgment
could be obtained. Civil judgments can be collected in the ways authorized by your state's law. This generally does include wage garnishment.
When you say you were threatened with having "your income tax withheld", I take this to refer to your income tax refund being paid by the IRS to the payday loan company. The IRS does not collect debts for private business. However, some states do have laws authorizing state tax refunds to be paid to satisfy a garnishment for a civil debt. Check with your state or a local attorney.
Of course, if you acknowledge that you owe the payday loan, the simplest course of action is to make arrangements to pay back the debt.
Good luck with your case.
Category: Payday loans