Can a payday loan company file a criminal case against you?

Penalties for bad checks

Recently on our forum a user asked, “If I wrote a bad check to a payday loan company and the bank has been closed since 2008 can the payday loan company file criminal charges against me?”

Without more information about the specifics of this user’s question it’s difficult to determine the check writer’s motive and whether they intentionally committed fraud. With this mind, general information about check fraud is outlined below.

Criminal charges for bad check writing

First, intentionally writing a bad check is considered a criminal offense and can result in a criminal charge and potential conviction. Check fraud is prosecuted at the state level and whether the state could charge you with a misdemeanor or felony will vary by state and the amount of the check.

For example, if you intentionally write a bad check in Alabama for $500 or more you may be charged with a crime and be required to pay a fine of no less than $500 but no more than $5,000. You could also be imprisoned up to three years. In Arizona, if the check is less than $25 you could face up to six months in jail and/or up to a $300 fine. If the check is between $25 up to $100 you could spend one to five years in jail and/or be forced to pay up to $500 in fines.

If the payday loan company decides to pursue criminal charges against a borrower they should first give them written notice of their intentions. The written notice may be a prelude to prosecution and generally must contain specific language. Whether the prosecutor will file charges depends again on state laws. Some states have instituted programs to allow check writers to avoid prosecution by repaying their debts.

Civil Charges for bad check writing

Another option for the payday loan business is to file a claim against the check writer and attempt to recover their losses in small claims court. Not all claims can be heard in small claims court, but if the check is within the state’s limits (generally $2,000 to $5,000) the payday company may sue in court.

If they win, they may recover not only the cost of the bad check, but additional payments to cover court costs and legal fees. In some states judgments can be issued by the court which allows wage garnishments or other means to recover damages; other states do not allow wage garnishments for unsecured loans.

Statute of limitations for criminal charges

Since our user asked about a check that was written in 2008 or earlier we need to address the issue of statute of limitations. The statute of limitations is the amount of time the state has to charge someone with a crime.

Statute of limitations varies by state but can be found in each state’s criminal code. For instance, Code Section Chapter twelve of the Texas Criminal Code governs the criminal statute of limitations for the state of Texas.

For example, felonies generally have a statute of limitations of three years to ten, although crimes such as murder do not have a statute of limitations for prosecutions. Misdemeanors have a statute of limitations of two years from the date the crime was committed. The statute of limitations may not apply in specific cases specifically if a criminal indictment is pending or the accused has left the state.