Pay Day Loans Harris County, Texas
Houston, Texas, is home to a large number of pay day lenders which often deal with borrowers who default on their payments. In order for criminal prosecution to take place at the local court level (where the check was written) it is important to understand the legal finance statutes that apply under Tex. Fin. Code §342.251. One of the primary factors to be considered is whether the individual knew that the payment would not be valid at the time they wrote the check or whether there was an agreement to hold the check until a specific date when funds would be available. The initial scenario allows for prosecution whereas the second does not because the intent to default was not present. For payday lenders to collect on small loans with high interest rates the following guidelines must be adhered to:
The maximum scheduled term of a loan made under this subchapter is:
(1) Loans of $100 or less, the lesser of:
(A) one month for each multiple of $10 of cash advance; or
(B) 6 months
(2) Loans of more than $100:
(A) one month for each multiple of $20 cash advance
Instead of the charges authorized by §342.201, a loan contract may provide for:
(1) Cash advance of less than $30:
(A) Acquisition charge is no more than $1 for each $5 of the cash advance
(2) Cash advance equal to or greater than $30 but not more than $100:
(A) Acquisition charge is no more than the amount equal to one-tenth of the cash advance; and
(B) Installment account handling charge that is no more than:
(i) $3.00 a month if cash advance is less than $35;
(ii) $3.50 a month if cash advance is more than $35 but less than $70; or
(iii) $4.00 a month if cash advance is less than $70
(3) Cash advance of more than $100:
(A) Acquisition charge that is no more than $10; and
(B) Installment account handling charge is no more than the ratio of $4.00 a month for each $100 of cash advance
A written contract and posted schedule of fees is required by law for every Texas lender’s operating location with the following specifications included in the agreement:
- Name of lender& loan amount,
- Issue date on check,
- Fee itemization,
- Date when check may be deposited,
- APR should be clearly written, and
- Consumer Credit Commissioner’s contact information (address and phone number).
Texas law protects the borrower by prohibiting lenders from splitting a single loan into multiple loans which would allow the lender to charge interest on each loan so they could make additional profit. There is a minimum term of 7 days and a max term of 31 days on all Texas payday loans and the loan can only be renewed on a monthly basis. Borrows need to be aware that criminal prosecution is very limited under Texas state law for payday loans and that the majority of jail threats are usually generated from Internet loans or from banks with no jurisdiction in this state or the state where the bank resides.
Bankruptcy and Payday Loans
If an individual has filed for bankruptcy than any collections on payday loans are stayed as it is treated like a credit card and usually discharged during the bankruptcy process.
