What starts as a small loan to help you cover your bills until you receive your next pay check can turn into a nightmare if you do not repay the money when it is due. The fees associated with the typical payday loan can make it an expensive way to borrow money. There is a risk that a borrower could be charged with the criminal offense of issuing a bad check.
It is easy to fall prey to the lure of a payday loan when funds are tight and you need money to get you through to the next pay check. These loans can cost up to $30 for each $100 that you borrow. If the loans are not repaid when they come due, the annual interest rate can rise to 780 percent.
Payday loans are repaid with a withdrawal from a borrower’s checking account. The anticipation is that by the time the loan is due for repayment, the borrower will have deposited sufficient funds into the account to cover the amount of the withdrawal. Some lenders take the position that the withdrawal made directly from a borrower’s account is the equivalent of writing a check, so not having sufficient funds in the account to cover the withdrawal is the same as issuing a bad check.
Issuing a bad check is a crime under section 32.41 of the Texas Penal Code. One of the elements of the crime is that the check issuer had knowledge that the account on which it was drawn did contain sufficient funds to cover it. Prosecutors can prove knowledge if the evidence shows that one of the following situations existed:
• The issuer did not have an account at the bank when the check was issued
• The bank refused to pay the check because of insufficient funds and the issuer failed to make good on the check within 30 days after finding out that payment had been refused
The law excludes postdated checks from its definition of a bad check. Texas law requires that the person issuing a check must have knowledge, at the time the check is given, that funds do not exist in the account on which it is drawn; a postdated check creates problems for prosecutors. Postdating a check is an acknowledgement by both the issuer and the receiver that enough money might not exist at the time of issuance.
An attorney might be a resource for answers to your questions or concerns about payday loans. The attorney might offer guidance and an explanation of possible defenses if you have been charged with giving a bad check in connection with a payday loan.
It’s easy to make a mistake and get in legal trouble with payday loans. If you are in this situation, then get a hold of Rand Mintzer today by calling 713-862-8880.