Can Payday Lenders Sue You?
Can you be sued for a payday loan? People are drowning in debt and cannot pay expenses. People can become prey to predatory lending practices like payday loans due to medical expenditures, credit card debt, etc. Payday loans, however, can make your financial condition worse.
You can take steps to prevent being brought before a small claims court if you have an unpaid payday loan. Read on to find out what might be done by payday lenders if you don’t repay your loan and how to resolve the situation as soon as possible.
What Is a Payday Loan?
A payday loan is a form of finance marketed to individuals with less-than-perfect credit. The goal of payday loans is to provide individuals with extra income between pay periods. Payday lenders are unconcerned with a borrower’s credit score, so this financing is typically attractive to those with poor credit. Most lenders will run a credit check before approving a loan; however, rapid online payday loans are frequently accessible without a credit check.
Payday loans may appear convenient but often come with hefty interest rates and inconvenient repayment terms. A payday loan provider expects clients to repay their debts on their next payday, typically within two weeks. Before committing to a payday loan, ensure you can repay the total debt within fourteen days or less. Most payday loan contracts contain a legal clause that allows lenders to charge excessively high-interest rates to borrowers who do not repay the loan within two weeks.
Can a Cash Advance Company Sue You? And File a Civil Lawsuit against You?
Yes, a payday loan provider may have the power to sue you if you don’t pay back the debt. The conditions of the payment schedule are included in the contract you sign when you get a loan. If you don’t repay the loan, you violate those clauses in the agreement. Lenders have the right to sue you as a result of this contract violation so that they can get their money back.
Before pursuing late-paying customers to court, payday lenders may also cooperate with a debt collector. Lenders can work with a debt collection firm when customers don’t repay their loans. Therefore, it is essential not to ignore calls from a collection agency regarding an outstanding payday loan.
If payday lenders prevail in court, what happens?
A payday lender or debt collector may be entitled to a set quantity of payments if a judge rules in their favor in court. The court may decide to put a lien on your house or car or garnish your wages or bank accounts to collect these payments. When a particular sum of money is taken directly out of your paycheck and transferred to an entitled party, it’s called wage garnishment. Like this, bank garnishment involves now withdrawing funds from your bank account. Your account balance may go down after the bank garnishment procedure, depending on how much money you have in it.
If a payday lender or debt collector files a lien against a piece of your property, such as a car or house, they will get partial ownership of that asset. Then, you risk taking that property away from you if you don’t make payments per the court’s orders and decisions.
May I go to jail if I don’t repay a payday loan?
No. Failing to repay a payday loan does not automatically result in jail time. It is unlawful for payday lenders to caution you that you could go to jail if you default on your loan. The Fair Debt Collection Practices Act, generally known as the FDCPA, prohibits payday lenders from threatening debtors with jail time or other severe criminal penalties. Payday loan default is not a crime according to the law.
How Do I Respond If a Payday Lender Sues Me?
Most often, debt collectors rather than payday lenders file lawsuits against customers who default on their payday loans. Whatever the case, you should seriously treat any court summons you receive from a debt collection agency or payday lender. Ensure you thoroughly examine any court summons you receive about an overdue payday loan. Verify the accuracy of all the information on the court summons. On a court summons for an outstanding payday loan, you might see the following details:
- What is the amount owed?
- How much has the borrower already paid?
- The last payment made by the borrower (if they made any).
- The place and time of the borrower’s court appearance on the summons
- You might want to contact a law firm and ask for help if you notice anything wrong with the court summons. You can get legal counsel and assistance through the court system from a lawyer.
A court order should never be disregarded, no matter what. If you miss your court date, there could be an automatic default judgment in favor of the payday lender. As a result of that decision, you can be liable for any court costs, attorney fees, or other expenses the judge approved in the payday lender’s favor.
Can a Payday Lender be sued?
Yes! You have the right to sue a payday lender if you discover they are engaging in unethical behavior. You can also report any illegal activity you come across from a payday lender by filing a formal complaint with the Consumer Financial Protection Bureau. You can say payday lending organizations for several reasons, including:
- The lender charges your checking account in error.
- The lender doesn’t keep track of the loan installments you make.
- You obtain a loan for which you neither applied nor signed.
- You agreed to a loan, but you never got the money you borrowed.
- Your lender may charge you any unforeseen or hidden fees.
- You cannot speak with your lender about problems with your initial loan.
Pay close attention to your payments and fees when you have a payday loan. Your lender should promptly post your payments and include a detailed list of upcoming fees in your loan agreement. Make sure you read and comprehend your contract before you sign and commit to a loan, so nothing comes up at the last minute.
How to Handle Debt Collectors?
Those unable to repay a payday loan could receive calls from debt collectors. Don’t ignore them. Even though collection calls can be inconvenient, the easiest way to stop them is to repay your debt. Working with debt collectors’ collection attempts may be helpful.
You might wish to speak with a bankruptcy lawyer if you find yourself in a scenario where you are utterly unable to repay debt collectors. They might be able to provide you with a free credit counseling consultation.
What are the Tips on Repaying Payday Loan Debt?
If you have a payday loan, it’s best to pay it off so you won’t get calls from collection agencies. Not only can defaulting on a loan put you in danger of legal action, but it might also have a substantial adverse effect on your credit rating.
Delinquent payments negatively impact your credit score because your payment history is the most critical component. Your credit score could be negatively affected by late or missed payments on any form of loan for up to seven years! Make every effort to pay your fees on time to avoid dealing with bad credit.
See the suggestions below for more sound guidance on paying off payday loan debt.
Refinance Using a Better Loan
When you refinance a payday loan with a better loan, you can rapidly pay off your payday debt. Consider traditional loans from a bank or credit union if your credit score is high. Remember that many credit unions require borrowers to reside in a particular location to be eligible for funding.
If your credit score is low, you might think about quick internet loans from a personal installment lender. Personal installment loans frequently provide affordable interest rates and flexible payback schedules. Installment loans might also aid with credit improvement!
Enroll in Autopay
It might be a good idea to choose automatic payments to ensure that you pay all your loans off on schedule. Lenders can withdraw funds immediately from your bank account or checking account on the due date of your loan payment via automatic payments, often known as autopay.
Avoid letting a payday loan wreck your finances! Visit the PaydayDaze free resource blog if you need additional assistance managing your funds.