When it comes to payday loans, it's important to understand the legal implications of not paying them back. If you don't pay your loan, the payday lender or a debt collector can usually sue you to collect. If they win, or if you do not contest the lawsuit or claim, the court will enter an order or judgment against you. The order or judgment will indicate the amount of money you owe.
No, you can't be arrested for not paying a payday loan. However, if you are being sued or a court judgment was entered against you and you ignore a court order to appear, a judge can issue an arrest warrant against you. Defaulting on a payday loan can result in bank overdraft fees, collection calls, damage to your credit score, a day in court, and a garnishment of your paycheck. The good news is that payday lenders rarely have the legal authority to file hot check charges, and they have no say in whether the prosecutor will decide to pursue the case.
This means that if you are proactive and contact the payday lender when you know you won't be able to return them, you can avoid legal issues. It's also important to understand how payday loans work and how much they will ultimately cost before agreeing to the terms of the loan. With interest rates that can reach up to 400%, it is unfortunately quite common for borrowers to drown under the rising debt that comes with payday loans, making it difficult to repay and recover. If you find yourself in this situation, there are several options available.
You could pay off the debt for less than you owe or file for bankruptcy if your debts are overwhelming. Mobile Paycheck Advance Apps work with iPhone and Android, and many offer payment on the next payday. DebtHammer also offers content, calculators, tips and repayment programs for those struggling with payday loan debt. No matter what your lender or a debt collector says, no one will go to jail for not paying payday loans. However, if a payday lender takes you to court, it is based on the assumption that you will not respond to the subpoena, forcing the court to rule in your favor.
They can stay that way for a while, but since payday lenders often charge interest rates of up to 782% in Minnesota, it won't work for long. It's also important to note that it is a violation of federal law to require automatic debits from a bank account as a condition of obtaining a loan.
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