Expert: Creditwrench - 7/9/2009

Question
My roommate took out 5 Payday Loans last year, and he has not paid all of them back. He claims that he found out the loans are illegal in NY, and he does not have to pay them back. I told him that since he did this over the Internet, the laws do not apply the same way. I told him that the mere fact that he signed and cashed the check meant that he accepted their terms. He has already gotten suckered in by one of those companies that CLAIM to help you pay down your debt for pennies on the dollar. He paid about $400 to them and not a dime went towards his debts. Then, when he couldn't finish paying their fees, they dropped him as a "Client."

Now, 6 moths later, he is trying to pay back some of these loans, but not at the same time. He has been getting harrassing calls from (at least) one of them, and he either pretends to be somebody else when he answers the phone, or he just lets the call go to his voice mail. I do not know if the callers are from the Payday Loan companies, or from a Collections agency. One of the callers stated that if he does not call them back, he will be arrested for fraud. This person even went as far as identifying himself as an Officer (but it sounded like he was reading from a script). He further stated that the Police will come to his home and his Job to arrest him. I have already told him that this is just a scare tactic that they use, and that legally, all they can do is sue him in Small Claims court, and then (after they win the case) have his pay check garnished. I also told him that legally, they can not call up his job and tell them anything other than they wish to speak with him. They can NOT discuss his loan with anyone but him. Is there anything my roommate can do at this point in time? Does he have any legal recourse against their threats? Is it wise for him to continue ignoring their calls, or should he try to negotiate with them?

Answer
He is doing all the wrong things. He should be glad to talk to them but he should be using my http://www.creditwrench.com/18questions.html web page to learn how to control the calls, get violations he can use to sue them with later and get them to quit calling him voluntarily. He needs to listen to the recordings on that page so he learns how to handle them on the phone. He should be recording the calls. He needs to tape them telling him that he will be arrested. Its illegal for them to tell him anything like that. He needs to learn how to take them to federal court where they will be glad to forget about collecting and pay him to go away and leave them alone. That's the way to win. In otherwords, he needs to become a creditwrench student and learn how to do things the right way instead of taking their abuse.