Can Payday Lenders Sue, Arrest, Or Put You In Jail For A Payday Loan?
August 4, 2011 at 6:12 pm
Many payday loan consumers live in fear everyday because of unpaid payday loans. The reason why is payday lenders sometimes threaten customers to pay back their payday loan debt within a short deadline or they could face serious consequences if they do not come up with the money on time.
We have heard several threats and here are some of the most commonly used ones:
- We will sue you for check fraud.
- We will have someone arrest you.
- We will make sure you go to jail.
Are these true? Can a payday lender really sue, arrest, or put you in jail for a payday loan? The answer is no. Defaulting on a payday loan is not a crime and cannot result in criminal charges. This means that you cannot be prosecuted, arrested, or put in jail check fraud, breach of contract, or anything else that your payday lender might threaten you with.
Making false threats to collect on a debt is illegal in every state. If your payday lender has threatened you with the statements above, or something similar, it is likely that your payday lender is conducting business illegally and is unlicensed. This is usually the case if you received your payday loan from a company online. 90% of internet payday lenders are unlicensed, which means that they do not have the legal ability to take civil action against you. For this reason, they threaten customers into paying them because they know that if they are not successful on collecting the debt themselves, then there is no other way for them to get their money back. They also cannot take you to court if you live in a state where payday lending is prohibited. The states in which payday lending is not allowed are:
- New Jersey
- New York
- North Carolina
- Washington DC
- West Virginia
Storefront payday lenders are a different case. Storefront payday lenders are legal and licensed, which means that they can file a civil lawsuit against you. The purpose of a civil lawsuit is to simply obtain a judgment for a wage garnishment so that they can be repaid.
To avoid civil action, you need to keep communication lines open between you and your licensed payday lender. Taking you to small claims court for a payday loan is the last thing that your payday lenders want to do. Suing you will take a lot of paperwork, money, and time out of your payday lender. The only reason your payday lender will resort to civil action is if they are hopeless about getting their money back. The best thing for you to do is to talk to them about your situation and try to work out an arrangement that you can both agree on so that you can both avoid the legal battle.
In some cases, your storefront payday lender may not cooperate with you for a payment arrangement. If this is the case, try to contact their corporate office instead. They are usually more lenient to work with and have power over the specific store that you borrowed the payday loan from. If the corporate office accepts the payment arrangement you are proposing, the store cannot disapprove it.
To avoid encountering these problems in the future, keep in mind that payday loans are short-term loans that should be avoided at all costs. Do not take out a payday loan unless you are 100% sure that you will be able to pay the full amount back in time. Never take out more than one payday loan at a time because doing so will set you up for a trap that will be very difficult to get out of.
If you find yourself drowning in payday loan debt, do not be afraid to seek professional help. Getting out debt is easier with the right payday loan consolidation company on your side. Do not lose another night's sleep worrying about your finances anymore. Do everything you can to help yourself gain the financial freedom you truly deserve.
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