Legal Question in Credit and Debt Law in Pennsylvania

I, like many other Americans feeling the financial burden of today, fell into the trap of Online Payday Loans. I did some research on the internet and apparently, according to PA State Law, these companies are prohibited from lending to PA residents. Upon further research, I was advised to close my bank account and make other arrangements with the institution. Due to other financial obligations I am unable to close my account at this time. I called my bank to make stop payment but they said that I could not be guaranteed that the stop payments will work for these companies and stated that I need to make arrangements with the actual lender. I emailed and faxed letters to each company stating that I revoke permission to withdraw from my bank account. One company actually returned my email and stated that they are exempt from all laws because they are official Native American lending company. They also stated that I cannot revoke my permission to withdraw money from my account and if I closed my account they will send me to a collection agency. They stated that I must pay in full today or they will also charge me for a "missed payment." I have paid at least $360 fees on a $300 loan and according to them, I still owe $260 on the principal. Where do I go from here? I can't actually afford a lawyer or I wouldn't have needed the Payday Loans to begin with.


Asked on 3/17/11, 11:33 am

1 Answer from Attorneys
Rachel Hunter

File a complaint with the PA attorney general.

I don't understand why you cannot close your bank account. Take money out of there if you cannot close your account. I hate auto-drafts and you should stop any of those. If you have direct deposits, stop those as well. You will have to open up a separate account either at this bank or another bank. You would be better off at a credit union or small community bank, an online bank or, if you live near the border, an out of state bank.

I have not researched the question of a Native American lending agency. Did you get a payday loan from them?

And if they send you to collections, so what? Many collectors are actually better to deal with than original creditors and you can often make a deal with them. I cannot give you any guarantees and this is just general advice without knowing all the facts.

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Answered on 3/17/11, 2:30 pm


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