payday loan threatening me.

[piccione88]

 I have been paying off my debt, and doing very well. For the last four months I have paid about 8k in debt.
 Today my father had to sign for a letter from a payday loan place. I had completely forgotten about this loan. The bill said I owed them 371 with late fees, on a 300 dollar loan.
 I called up the place to find out why I was just being contacted about a 3 year old loan, and to work out a settlment. They then informed me that I actually owe them 1500. After some talking, they agreed to take 600. I offered them 400 and told them I wouldn't go above that.
 They are now threatening to take me to court. I am thinking that this is posturing.
 I have had numerous other debts that show up on my credit report, or have managed to contact me. So with all that in mind, am I gambling too much on a 200 dollar difference? Also I live in Wisconsin, which is one of the most consumer friendly states around, so I also have that in my favor. And if it wasn't clear, this loan was taken out in March of 2012.

[Bearded Man]

What's their reasoning for the $1500 when the bill they sent was only $371?

That's what I'm wondering. Are they trying to milk you just because you contacted them? I'd pay the $371 via the stub they sent and call it good. Unless they sent you something else in writing saying $1,500, I'd just pay the money the asked for at first and only consider options if they come after you after that.

You know, there's a huge storm brewing around payday loans. Congress is enacting/has enacted some sweeping legislation around these sharks. Offering to take your story to the media if they try to go further than the $371 might dissuade them since it would draw the attention of regulators and the general public. Talk to the manager or person in charge, not the minimum wage moron at the front desk...One has a vested interest in protecting their job that pays a whopping $13 an hour. The other does not.

File a complaint with the BBB, bring some heat on them. Also try your states Attorney Generals office, specifically the consumer affairs division. Start attracting all kinds of negative attention to them and let them know that you are doing that or going to do it since they are taking advantage of you. Put the pressure on them and let the media tear them apart.

[MDM]

I have been paying off my debt, and doing very well. For the last four months I have paid about 8k in debt.
 Today my father had to sign for a letter from a payday loan place. I had completely forgotten about this loan. The bill said I owed them 371 with late fees, on a 300 dollar loan.
 I called up the place to find out why I was just being contacted about a 3 year old loan, and to work out a settlment. They then informed me that I actually owe them 1500.

To go from $300 to $371 over 3.25 years is ~6.5% interest rate.  To go from $300 to $1500 over 3.25 years is ~50% interest rate.

Do you have the paperwork specifying the interest rate when you signed for the loan?

[shotgunwilly]

I have been paying off my debt, and doing very well. For the last four months I have paid about 8k in debt.
 Today my father had to sign for a letter from a payday loan place. I had completely forgotten about this loan. The bill said I owed them 371 with late fees, on a 300 dollar loan.
 I called up the place to find out why I was just being contacted about a 3 year old loan, and to work out a settlment. They then informed me that I actually owe them 1500.

To go from $300 to $371 over 3.25 years is ~6.5% interest rate.  To go from $300 to $1500 over 3.25 years is ~50% interest rate.

Do you have the paperwork specifying the interest rate when you signed for the loan?

Seeing as how its a payday loan, the $1500 actually sounds more realistic... They're not in the business because they make 6.5% a year.  Look for the terms.

[piccione88]

 I have no paperwork specifying the details of the loan. I do believe that it's at 1500 now though.. I got it because there was a two week interest free promotion. I remember being shocked when I saw how high the interest was. That didn't matter to me though. Even though I needed a 300 dollar loan to survive, I was sure I would pay it within two weeks.
 However I've been told by a couple people, that these types of places almost never get the full amount through the court in Wisconsin.
  I feel like I should pay, I did take the loan out. At the same time, every other creditor has contacted me, and I have been working it out with them. Had this place contacted me a year ago, I would have put them as priority #1. It seems shady to put it off until now.

[Retired To Win]

....
 Today my father had to sign for a letter from a payday loan place. I had completely forgotten about this loan. The bill said I owed them 371 with late fees, on a 300 dollar loan.

 I called up the place to find out why I was just being contacted about a 3 year old loan, and to work out a settlment. They then informed me that I actually owe them 1500. After some talking, they agreed to take 600. I offered them 400 and told them I wouldn't go above that.

 They are now threatening to take me to court. I am thinking that this is posturing...

I can't speak to how their $1500 figure (and its calculation) would hold up in court.  I can tell you that for them to take this to court they will most likely (as practically all lenders and creditors do) refer it first to a collection agency.  IF the agency collects, it will get a third of whatever it recovers.  If you hold your ground against the agency, the matter will eventually be passed on to a collections attorney.  IF the attorney collects, the cost to the lender will be 50% of whatever is recovered.

Now here's the kicker.  Usually, the attorney gets complete freedom to settle at the attorney's own discretion.  It's much more profitable for the attorney to settle than spend the time to go to court.  So the attorney will settle for anything that's halfway reasonable.  If all of this happened, it's doubtful that the payday lender would get much (if any) more than you have already offered.

I went through this once with a hospital.  After about 3 years of totally stupid running around on their part, the attorney they got settled with me for EXACTLY what I had originally offered the hospital.  Except that the hospital then ended up getting only half.

Good luck.

[Cpa Cat]

What's their reasoning for the $1500 when the bill they sent was only $371?

That's what I'm wondering. Are they trying to milk you just because you contacted them? I'd pay the $371 via the stub they sent and call it good. Unless they sent you something else in writing saying $1,500, I'd just pay the money the asked for at first and only consider options if they come after you after that.

No, don't just pay via the stub. Absolutely do not pay anything unless they agree that it's a settlement in full. Paying a partial amount of what you owe (which they now claim is $1500) will renew the statute of limitations on the loan.

[MDM]

I have no paperwork specifying the details of the loan.

Strictly from googling   wisconsin usury laws   it seems (i.e., this is not legal advice) that the maximum interest you can be charged is 12%.   Don't know how that works with, for example, credit cards that usually charge much more, so it may or may not apply to you.  At 12% you would owe ~$442.

[slugline]

Well, seeing that the OP "forgot" about the loan for three years, there were probably some massive late payment fees that were compounding every month even faster than the interest itself.

[The_Dude]

Well, seeing that the OP "forgot" about the loan for three years, there were probably some massive late payment fees that were compounding every month even faster than the interest itself.

This is what I was thinking as well.  My guess is that the fees would exceed the interest in this situation.

[MDM]

At some point Cathy or other legal scholar may step in and set us all straight, but meanwhile see http://docs.legis.wisconsin.gov/statutes/statutes/138.pdf.

In particular,
"(10) INTEREST, PENALTIES, AND FEES.
 (a)  Interest.
  1.  Except as provided in sub. (12) (b), this section imposes no limit on the interest  that a licensee may charge before the maturity date of a payday loan.
  2.  If a payday loan is not paid in full on or before the maturity date,  a licensee may charge, after the maturity date, interest at a rate not exceeding 2.75 percent per month...."

and

"(b)  No licensee may make a payday loan to a customer that results in the customer having an outstanding aggregate liability in principal, interest, and all other fees and charges, to all licensees who have made payday loans to the customer of more than $1,500 or 35 percent of the customer’s gross monthly income, whichever is less."

[Argyle]

"I was sure I would pay it within two weeks."  — What happened that it's now three years later?

[kathrynd]

Pay the bill.
That's the cost of not paying it off, when due.

[kendallf]

"outstanding aggregate liability in principal, interest, and all other fees and charges, to all licensees who have made payday loans to the customer of more than $1,500 or 35 percent of the customer’s gross monthly income, whichever is less."

There's that $1500 right there.. they'll come up with penalties and/or interest in whatever combination exceeds $1500 and then ask for that.

If your credit is already shot and you're arranging settlement plans with other creditors, it probably won't hurt to write them (I wouldn't bother calling) and offer a settlement amount.  It sounds like they're trying to collect the max allowed by law already so it won't get worse.

[piccione88]

"I was sure I would pay it within two weeks."  — What happened that it's now three years later?

That was meant to be self depricating/sarcastic. I was just barreling through debt at that point. There was no way I could have obviously, but I rationalized it until it made sense.

[piccione88]

Well, seeing that the OP "forgot" about the loan for three years, there were probably some massive late payment fees that were compounding every month even faster than the interest itself.

This is what I was thinking as well.  My guess is that the fees would exceed the interest in this situation.

I forgot about after putting it off. Obviously I knew I had the payment the next month. However after 17 bills in collections, horrible bookkeeping, and just general bad lifestyle, it got lost in the shuffle.
 As far as the fees exceeding interest, nope. The 371 was the sum of principle, and fees. The rest is interest.

[slugline]

$371 grows into $1500 in 3 years when the interest rate is 48% compounded monthly. Boy, that sucks.

[BrickByBrick]

Just a note - record your phone conversations with them.  If a collector calls you and becomes verbally abusive or actually threatens you (beyond just taking you to court), they've violated federal law and you can now take them to court (so long as you have the recording).  In such a case, the easiest solution is to call the guys manager, replay the tape for him, then ask for the debt forgiven immediately and in writing.

Otherwise, I agree with the above posters.  Negotiate a bit more with them then pay them, but only if you have the cash on hand and you have a settlement in writing.  Don't bother setting up a payment plan with them.

[ShoulderThingThatGoesUp]

Recording a phone conversation without notice is illegal in a few states.

[Greg]

You should pay the loan back if you can, at a rate you can, since you took out the loan.  Don't send anything until you find out if the loan is still valid after 3 years.  Often, a collection agency or loan place will contact you right before it's set to be charged off as bad debt.  If you pay anything, it resets the clock on when the debt expires.

According to a little googling, the statute of limitations in Wisconsin is 6 years for written, oral and credit card contracts and 10 years for promissory notes.  So I don't think you can wait this one out.

I would ask them to send a payoff agreement for any reduced amount you agree on, try for less than half what they're saying the total is.  Send no money until you get it in writing.  Don't send a personal check, so they can't use that account info against you, send a cashier's check.