Question
Is it illegal to close an existing bank account and open a new one in order to avoid paying back a payday loan?
I ask this b/c I have a co-worker who was basically "bragging" about doing this yesterday at work. He was saying that he got 3 different payday loans online, then went to his bank and closed the account claiming there was "fraud" activity on the acct. Well apparently, the bank asked no questions and happily abliged, setting him up a new acct and closing the old one. Not only is this morally wrong but this seems like it would be illegal to. I know it's none of my business, but it really annoyed me that he got such a kick out of defrauding a loan company and running away from his financial responsibilities.
2 months ago - 8 answers
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It depends. In some states, payday lending is illegal. I know of at least one state where it is a felony to engage is payday lending. They cannot collect on an illegal contact. As far as the trouble he'll get into, the worst charge he would likely get charged with is writing bad checks. That's is not to say he couldn't get charged with something more, but it is unlikely. If payday lending is legal where he is, then they could sue him for the balance plus interest. Once obtaining a judgment, they could garnish wages and any accounts he may have.
Source(s)
by jjstvno
2 months ago
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Other Answers
yes, technically, as it is breach of contract and eventually, it will catch up to them. when payday tries to tap the account for the bad loan and find it closed, they will attempt collections and eventually find the new accounta nd immediately file for access to it as well. in addition to credit reporting and possible legal action.
by ez80227- 2 months ago
oh -- he hasn't gotten away. and probably won't. those payday loan outfits will sue -- probably right after the post-dated checks he issued to them are returned. who knows, if someone over at the PD or DA's office figures out there were three of them, your co-worker could be charged with fraud -- he intended to take the money and not repay -- that's fraud.
by Spock (rhp)- 2 months ago
Closing the account itself is not illegal (no one could enforce that, you don't give power of attorney over your account to the lender) Not paying a payday loan back is illegal. Even if the account is closed, the lender can (and will) track him down.
by Gutter- 2 months ago
It is illegal, but don't worry. Your friend will be caught for his immorality. They track such loans via SS#s that are attached to the loans and the bank accounts, so unless he went to the felony extreme of forging a SS card, he'll be caught soon, pay his debt, and do some community service or perhaps even some jail time. If he's lucky, he'll just have to pay back the loans. It will also go on his credit report which is also tracked via SS#. It's illegal to claim fraud when there is no fraud. It's called fraud.
by Mark- 2 months ago
yes this is very illegal and it will catch up to him sooner or later and he will be looking at felony charges so do not do it
by double t- 2 months ago
It'll come back to haunt him, as this IS fraud. Bank have a record on each and every one of these records, and since he had to present his ID each time, these defaults are likely in his credit report. --- Kasey C, PC guru since Apple II days Borg Burgers: Have it our way. Yours is irrelevant.
by Kasey C- 2 months ago
Honestly its not something I would recommend often and it can get you in worse trouble. But if you need one you need one. Hope you get what you need.
by Cody G- 2 months ago