When Payday Loans Go Wrong
This was never your intention, and now you have a real dilemma. Those payday loans have caught up to you, and you’re broke.
Do you know what you face? Do you understand what can happen? Do you have an idea what you can do?
Let’s take a look and see.
The most important thing to remember is that the check you wrote in advance for your loan is NOT considered an illegal check. You did NOT break the law writing that check to a payday loan lender. A lender can NOT claim any sort of “illegality” issue concerning that check you wrote.
In an effort to permit payday loan companies to give guaranteed cash advances to people with bad credit who have urgent situations and in a an immediate crisis, laws have developed around the area of payday loans where future income, future money in a bank account, could be drawn upon in advance, and done so legally.
The lender understands you don’t have money in your bank account now. If you did, you wouldn’t be getting their payday loan.
Additionally, you have not purchased items you wrote a check for which would have signaled (untruthfully) to the seller you had the money in your account to cover.
What DID happen was that a bad credit lender allowed you to take a loan til payday based on what money you will have in the future, and they knowingly accepted a check on an underfunded bank account now as detailed and permitted by the laws under which they operate and you are therefore serviced under.
So… Is it illegal to write a check in advance for a payday loan, even if you don’t have the funds then to have written that check?
As you can see above, this action is permitted by law. No illegal action was done on your part.
Can you go to jail for not paying back a payday loan? Can you be arrested?
This was a loan – a LOAN. Nothing illegal was done, and nonpayment of a loan is a civil matter, not a criminal one.
You will not get arrested; you will not go to jail; you will not have to face the police if you do not repay a loan.
There are consequences for not repaying loans, but going to jail is not one of them (except maybe in a good game of Monopoly).
What is the most likely thing I’ll encounter if I don’t make payments on a payday loan?
First of all, you may get a collection call from the lender later in the day of which your payment was due, asking if you are still coming in. If you talk to them before they do anything else, you might be able to get a little leeway in getting your payment to them late.
You may not always get a call though, particularly if the lender takes other options they have at hand which was detailed in the contract you signed with them to get the funds.
Minus working something out with your lender first, if you have online payday loans, and your bank account is the same listed with them and is active, you’ll probably see the full amount due on your loan automatically debited from your bank account.
If your account is short, you’ll be dealing with non-sufficient fund penalties with your bank then. This could all happen later in the day on the very day your loan (or at least minimum finance fee) was due!
You may see the exact same scenario if you borrow money from a payday cash advance store in your community as well. You will have an automatic deduction from your account, something your lender received permission from you to do in the event you missed a payment.
You may then ask “What if I just don’t have money in my account to cover what is due on my payday cash loans?
If your account is active, and you are simply short of the funds in your account to cover an automatic debit, you may see the check come through with insufficient funds due as well, OR the lender may try other routes to recoup what is due. They may try another debit from your account, have their collections department call you, or submit your account to an independent collections agency.
If you have closed your bank account, knowing you have a check still out, then your lender can only assume you wrote that check and have no intention of honoring your commitment to repay your loan at which time you are verging towards more problems with them. You will most likely face whatever collections actions that lender has available to them or even a civil law suit.
Good payday loan lenders will follow proper and legal procedures for collection purposes. Some of the not as great ones may display more hardball tactics.
Know your rights when you are late on payments and facing collection proceeding. Here is a great article on “Debt Collection Practices: When Hardball Tactics Go Too Far”.
Can lenders for no faxing no credit check payday loans contact an employer if I don’t repay my loan? After all, isn’t “privacy” a part of the deal of these kinds of loans?
Privacy is a part of the deal so long as you make your payments. If you can’t pay and just skip out on them, they may feel obligated to investigate, or they may speak with your employer about garnishing your wages, an action which is available to them by law as in any unpaid loans that can not be collected in other ways.
With wage garnishments though, remember that a lender can not just call your work and get a garnishment on your wages without formally suing you in a civil case and getting permission from the court to do so. Any lender who claims they will take all your wages immediately by just calling your employer is using one of those “hardball tactics” which is not permitted by law.
Can a payday lender garnish wages for a cash advance I got from a payday cash advance store?
Yes, but only after they sue you first and get permission to do so by a civil court.
Can a payday lender sue me and garnish wages for my online payday loans?
Yes, again but only after they sue you in a civil court and get permission. There is a difference here though. If the lender is operating nationally but does not have a state license where you live, it will be much harder for them to get a court order against your wages.
Can you be sued for nonpayment of a bad credit payday loan?
As you can see above, any lender can sue you for what you owe to them, and while the process may take some time for them to get a case to the courts, you can very likely expect to be sued in a civil court for nonpayment of a payday loan, just like you could with any bad debt where you have not worked something out that is workable for you and satisfactory to the lender.
Will a payday loan go on my credit report?
Payday loans are “no credit check loans”, so they don’t go on your credit report so long as you pay them off.
If you stop payments, the lender may then put that debt and a negative remark on your credit report.
Are the people who collect on payday loans as mean as I think they might be?
First of all, even payday loan lenders need to honor the Fair Debt Collection Practices Act. If they do not, then it is YOUR right to sue THEM. Read the law, and know what lenders can and can not do when you are late on loan payments.
Aside from that, any lender can have collections people who are pretty good at making people feel pretty bad, even within the law.
However, if you are truly strapped and in trouble, talking with your payday loan lender might be easier than you think it might be.
After all, any good business person understands you can’t get water from a rock (unless you are Moses). So as long as you communicate with your lender and do all you can to work something out, you have a good chance of coming to some sort of compromise with your payday loan company.
Are there groups or organizations that can provide real help for payday loan problems?
If you need professional assistance and relief from debt, search for payday loan consolidation companies and payday loan debt settlement companies to work with.
Make sure any company you chose has people who specialize in debt consolidation and/or debt relief from payday loans and cash advances so they will understand exactly how to work with these kinds of lenders.
A great website with lots of debt relief information and referrals from others who have gone down your same path before is Debt Consolidation Care.
If your plans include filing for bankruptcy, a professional bankruptcy attorney (or your community’s legal aid service if you qualify) will be your best source of guidance and direction and will be able to provide protection and peace for your family until you can be released from those debt obligations that have gone too far for you to handle anymore.
When payday loans go bad, it can be a bad situation, but it is not the end of the world either. Such times of weakness can make you stronger. They certainly help you to understand just what is important and not important in life. Your family is important. Your life is important. Your faith is important. Your future is important.
Don’t let this situation get you down. You’re already down! Let this help you find the strength you need to get back on your feet, whether it is your inner strength to hunker down and get things right… or the strength of another helping you through until you can stand again with your face up and your chin high.
The real question is not what will happen if you can’t pay your payday loans, but what you need to do next.
Find what you can do NOW, and keep going with encouragement knowing you are now doing the best you can for your situation and the ones you love most of all.
This is the 10th article of a series of no credit check loans for people with bad credit. See the list of articles here: http://padoozles.com/do-you-need-cash-loans-with-bad-credit-read-this/
Please see our related links below for more articles to help you through this time or for other articles that may be of interest to you and your family.