Can You Go To Jail For Not Paying Payday Loans

Did you know that 12 million Americans apply for payday loans each year? This is hardly surprising, considering that many working Americans who cannot get traditional loans rely on payday loans to assist them in meeting their financial obligations.

When you want quick cash to handle an emergency, payday loans could appear handy and provide a temporary answer. Nevertheless, there are substantial costs and interest associated with these loans. The most frequent cause of payday loan defaults is this disadvantage.

Can You Go To Jail For Not Paying Payday Loans?

You may be worried about the repercussions if you have fallen behind on your payday loan payments. Can You Go To Jail For Not Paying Payday Loans? Is it allowed for people to default on payday loans? Some may even be concerned about facing jail time.

No, is the brief response. If you default on a payday loan, you cannot be arrested. However, you may be arrested if you are sued for a payday loan debt and fail to appear in court. In most places, it is against the law for a creditor to even threaten to have a borrower arrested.

Can A Payday Lender Sue You?

Those who have fallen behind on their payday loans are especially afraid of being sued. It seems that the last place they want to go for a loan default is the courtroom.

Although they are adept at threatening you, payday lenders cannot sue you. Yes, that is the response to this. If you break the conditions of your loan agreement or fail on a loan, a payday lender has the right to sue you in court.

However, payday lenders cannot take you to a criminal court, only a civil one. Therefore, they often threaten to sue but never follow through.

First, given the associated legal costs, attending court is costly. Second, rather than pursuing legal action against you, most lenders would choose to negotiate and reach an out-of-court deal. 

If a payday lender sues you in court, they count on you not to answer their summons, which would compel the judge to find in their favor. The judge could impose a wage garnishment in such a situation.

How Should I Proceed If I Am Unable to Repay a Payday Loan?

You have financial difficulties and cannot repay your payday loan. If so, take into account the following choices:

1. Engage in negotiations with the payday lender.

If you can’t pay back the entire loan amount but can increase some of it, try working out a payment plan with the lender. Alternatively, you might pay the remaining balance in return for paying back a specific portion of the loan.

If you and the payday lender come to an arrangement, make sure it is documented in writing for future reference. Remember that the payday lender may disagree with you, and the talks may not succeed. In that case, you still have choices.

2. Make a bankruptcy filing.

It is wise to file for bankruptcy and contact a knowledgeable attorney. The unsecured payday loan will become worthless upon filing for bankruptcy, ending all debt collection attempts.

The Impacts Of Not Making Payday Loan Payments

Payday loans that are past due will ultimately default if they are ignored. This is the fastest way for eager lenders to bombard you with collection calls. Lenders may put further pressure on you and use forceful collection techniques in addition to fees and increased interest. In the end, this can get you into legal trouble and negatively affect your credit score, making it more difficult for you to get funding in the future.

1. Extra Charges and Interest

Lenders will take money directly from your account to recoup what you owe them. If your loan arrangement permits the lender to access your bank account, they may make many withdrawal attempts; if you need more money, this might result in multiple overdraft fines. If your lender cannot collect, they will become more aggressive and show little concern for the expenditures you incur.

2. Debt Recovery Methods and Activities

Payday lenders will attempt to recover the past-due amount before contacting a debt collector for assistance. Under the federal Fair Debt Collection Practices Act, a person or business that routinely collects debts owing to others, typically when such payments are past due, is considered a debt collector. This may allude to a debt-collecting organisation or legal practice.

Debt collectors may pursue the debt by contacting your work, family, or any references you provided on the loan, among other strategies.

3. Summons to Court

Lenders have the right to sue you and bring you before the court for minor amounts. If you fail to appear in court, the judge may enter a default judgment in favor of the lender or collection agency. States have different laws; thus, a court summons may have other effects depending on where you live. The judge can allow the lender to garnish your pay if you lose your legal struggle. Liens on real estate and bank accounts are additional options.

How Much Do Payday Loans Cost

How Do You Qualify For Payday Loans

Conclusion:

When taking out a payday loan, you should know what you’re getting into, just as with other types of credit. Before accepting any loan conditions, be sure you know how it will be repaid and how much it will cost.

Above all, you should always respect a summons to appear in court for an outstanding obligation served. Instead, reply as quickly as you can. 

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