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Texas Residents Receiving Jail Time for Failure to Repay Loans
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Summary: The inability for some Texas residents to repay payday loans has sent them to prison despite a law prohibiting such practices. 

Over the last two years at least six people have been sent to prison for owing money on payday loans, according to The Huffington Post.


Texas Appleseed, an economic advocacy group, has discovered that more than 1,500 debtors have had criminal charges filed against them in Texas despite a law enacted in 2012 that prohibits lenders from using criminal charges to collect debts.

Texas Appleseed found that 1,576 criminal complaints have been lodged against debtors in eight counties within the state since 2012. The advocacy group also discovered that the debtors have been forced to repay $166,000 due to those charges.

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Appleseed submitted a letter on December 17 to the Texas Attorney General and the Consumer Financial Protection Bureau.

It is against federal law, the Texas constitution and the Texas penal code to use courts as debt collection agencies.

The 2012 law makes it a civil, not criminal, matter when someone fails to repay a loan. Lenders of payday loans cannot pursue criminal charges against a debtor unless fraud or another crime has been established clearly.

Criminal charges in Texas are usually filed using the word of the lender and evidence that is typically insufficient.

The Texas Justice of the Peace Courts, which take on claims worth less than $10,000, seem to be approving bad check affidavits and then filing criminal charges in those cases.

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The borrower must enter a plea after charges are filed or be issued an arrest warrant. If the borrower decides to plead guilty, he or she will need to pay a fine on top of the money they already own the lender.

Sam Gilford, from the Consumer Financial Protection Bureau, told The Huffington Post, “Consumers should not be subjected to illegal threats when they are struggling to pay their bills, and lenders should not expect to break the law without consequences.”

Sheer overload is the reason why predatory behavior continues by lenders. Susan Steeg, the Travis County Justice of the Peace, said that her office was instructed to file charges when they receive affidavits by the county attorney. Once the charges are filed they are sent to the office of the county attorney. The county attorney must review the cases and make a decision as to whether or not to prosecute them.

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Despite this info from Steeg, Travis County Attorney David Escamilla said his office never issued those instructions.

“We don’t do it,” Escamilla said.

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