Expert: Creditwrench - 11/17/2007

Question
QUESTION: I took custody of my children 9 months ago, and was getting no support from my ex-wife at that time or to this day. I had to start cash advancing at these payday loan places to cover bills and food. It started small and now I have four loans out. I did not get the bonus money from my job that was going to pay for the cash advances, so I had to close my checking account out before they started pulling money out I did not have, and causing my checking account to go into the negitive and having fees apply left and right. I am in the middle of filing for a chapter 13, but my father is concerned that I just caused fraud on these payday loans by closing my checking account and not paying them back. He is now afraid I may goto prison for a federal crime on writing "bad checks". Is that true? Will I end up having a charge brought up against me for "Fraud" since I closed my checking account out before the payday loans pulled their money? Is this a crime I just committed?

ANSWER: There is no federal statute against writing bad checks that I know of and I've never heard of anybody going to federal prison for writing hot checks so I wouldn't worry too much about it being a federal crime. If anything you would go to state prison for writing hot checks but I wouldn't get all worried about that either for the simple reason that they knew full well that the checks were drawn on insufficient funds when they accepted them. If you had funds you would not have gone to them in the first place and all state laws reflect this so you won't be prosecuted for that either. Fraud? I doubt that too. It is a civil matter, not a criminal one. Sometimes they try to scare people by telling them they will file charges against them for the checks but it can only be civil charges, not criminal.

---------- FOLLOW-UP ----------

QUESTION: Thank you very much for the answer to my first question. Two more question please: You made the mention of the Cash Advance places knowing that the checks were drawn on insufficient funds when they accepted them. So, more than likely, even though I closed my checking account, I will not even go to state prison? And I have the ability to place these cash advances in my Chapter 13?

Answer
You most likely won't be seeing the inside of any iron hotels for knowing that the checks were drawn on insufficient  funds. For a bit of humor, having insufficient funds is nothing new. We all know we have insufficient funds so there was really nothing new about that. (LOL). I don't know a thing about bankruptcy so you would have to check with your bankruptcy attorney on that one.