Lately in our Chapter 7 Bankruptcy Filings we’ve been dealing a lot with payday loan/advance companies as creditors.  These companies are substantially more difficult to deal with than the traditional credit card companies, auto loan servicers, and collection agencies.  Unlike these other creditors, to their credit some of who are even pleasant to deal with, most payday loan companies refuse to play by the rules.  They continue with the harassing calls and take payments after the bankruptcy has been filed, both of which are violations of the Bankruptcy Code and, arguably, other federal law including the FDCPA.  Most, especially the online companies, refuse to provide a mailing address where process can be served by the Bankruptcy Court, instead demanding the attorney fax them Notice of Filing which is not method of service recognized under the Federal Rules of Civil Procedure or the corresponding Bankruptcy rule.

The question then becomes; what can we do about this?  When formulating a strategy, I had to remind myself what the attorney’s role in a Chapter 7 Bankruptcy is.  It is my opinion that the consumer bankruptcy attorney exists to act as an intermediary between the debtor, the creditors, the court and the trustee.  To provide the best service to the client then, it is often necessary to play the payday loan company’s game and fax the Notice of Filing accompanied, of course, by a cease and desist letter full of thinly veiled threats to file a Motion for an Order to Show Cause why the should not be held in contempt for violating the automatic stay if they don’t cut it out.

Sometimes though, it is necessary to become more aggressive.  I have discovered there are a variety of tools available on the internet that allow me to find out who and where these companies are.  The client can usually provide a telephone number of a creditor who contacts them which I enter into www.whocalled.us which gives me an idea of who the creditor is and where they called from.  The next step is to search the Department of Labor and Economic Growth (or other state equivalent) website to find the company’s address, real name, and registered agent.  Armed with this information I have been able to get the company to agree to stop calling and taking payments from my clients with a simple phone call to their customer service and a follow-up letter.

Two things to keep in mind as you encounter similar scenarios:

1. If you are an attorney, you are governed by your state’s Rules of Professional Conduct.  These rules govern how you must conduct yourself when negotiating on behalf of a client and how you may interact with a non-attorney; the other side is often not governed by the same rules so make sure you follow them even if they don’t.

2. Your goal should be to provide the best product to your client, this is a business model that is often covered up by attorneys’ egos.  By playing by the rules the payday advance companies demand, you are better serving your client by eliminating the harassment and payments that they came to you to prevent.