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Can I Go To Court If I Don’t Repay My Payday Loan? 

By June 22, 2022June 24th, 2022No Comments
If I Don’t Pay Back A Payday Loan, Can I Go To Court?

Can I Go To Court If I Don’t Repay My Payday Loan? 

Lenders have the right to take you to court if you don’t pay back a payday loan. If you don’t make your agreed-upon loan repayments, a payday lender has the right to sue you in court.

However, before this, a lender would typically try to get the money you owe through a mutually agreeable repayment plan.

Payday lenders seldom take a customer to court since doing so costs money and doesn’t always result in a win.

What Will Happen If I Don’t Pay Back?

If you don’t pay back a payday loan, you might be prosecuted. Lenders have the right to take legal action against you to recoup the funds you owe.

It is often the final option for lenders to take legal action. Expanding legal action to all of the 12 million Americans who use payday loans yearly would be a tremendous burden for lenders. Because of this, they will try to obtain their money back without going to court.

Even yet, it’s not unheard of for borrowers to be dragged to court for their inability to repay their loans. Even if you don’t contest the lender’s claim or if they win anyhow, the court will issue a judgment or order against you.

As a result, you should only borrow what you can afford to pay back. Before applying for payday loans, make sure you understand the loan conditions and your responsibilities as a borrower.

Suppose I’m Arrested for Not Paying My Loan. What Happens Next?

Don’t forget to attend court if you’ve received a summons! When you’ve been summoned to appear in court, don’t skip it.

In many circumstances, lenders win lawsuits because their customers do not show up in court to defend themselves. Attending a court date is always to your best advantage, no matter what the circumstances.

While some banks and other financial institutions only litigate huge issues, others may sue over very modest sums of money. Nothing unusual about your lender going to court for a fair debt.

The Consequences of Non-Repayment

Defaulting on a payday loan may cause your bank account to be drained, your wages to be garnished, and you to be contacted by debt collectors and even sued. As soon as the agreed loan term has expired, your lender will continue to pursue any outstanding balance.

The payment lender will set up automatic withdrawals from your account to recoup as much of their debt as possible. This might cost you money in bank fees.

As a last resort, your lender may impose wage garnishment, which means that a portion of your wages is withheld and sent to the lender.

Your interest will continue to accrue even if you haven’t paid back your loan.

What Can I Do?

First and foremost, you should never take out more money than you know you can afford to pay back at the time of repayment. It’s important to remember that a payday loan should only be used as a last resort to cover an unforeseen need or to tide you over until your next paycheck arrives.

If you cannot make a planned loan payment, you should immediately call your lender to discuss your options. A lender will always strive to work out a deal that allows you to pay back the money you borrowed. As a result, a payment plan that is more reasonable and avoids a court appearance may be possible for you.

Talk to your lender about the possibility of extending the term of your loan. You may put off paying off your debt by paying a charge. To the already high cost of taking out a loan, an additional fee of around $45 is tacked on.

The burden of being unable to pay back a debt might be overwhelming. If you and your family still have bills to pay and meals to prepare, your financial needs must come first. Seeking guidance from a non-profit credit counselor, bankruptcy attorney, or even a legal assistance center is prudent in such circumstances.

If you can’t pay back your debts, you may be eligible to file for bankruptcy. Declaring bankruptcy is an option that should only be considered after consulting with an attorney or other qualified financial advisor.

Can I face criminal charges if I don’t repay?

The answer is no. You can’t be arrested for failing to pay back a short-term loan. A judge may issue an arrest warrant for you if you are sued or a court judgment has been issued against you, and you fail to appear as ordered.

A court order is something you should never disobey. If you are summoned to appear in court, you must comply with the summons and give any necessary information. Your court appearance may benefit from the advice of an attorney. A lender’s threat to have you arrested should be reported to your state’s attorney general and regulator.

If you default on a Payday Loan, what happens?

Your bank account will be deleted if you default on a payday loan. If you can, make an effort to pay off the debt.

Some of the more significant repercussions of failing to pay back your payday loan include, but are not limited to:

  • If you can’t return your payday loan, you may be charged additional fees and interest, depending on where you reside and which lender you select. Nonsufficient funds (NSF) fees are incurred when you do not have sufficient money to complete a transaction.
  • Debt collection activities include: For around 60 days, your lender will try to collect payment from you. If you don’t pay them within this time, they’ll likely hire a third-party debt collector. You should contact the debt collection firm and write to you frequently until the money is received.
  • Credit score damage: Your credit score should not be impacted if you return your payday loan on time. On the other side, if you fail on a loan and the debt is turned over to a collection agency, your credit score will suffer.
  • Court summons: Even if you owe a little money, you may be summoned to court by a collection agency. Where you reside might result in liens on your property and perhaps a wage garnishment.
  • Future financing difficulties: Because a payday loan default may linger on your credit record for up to seven years, you may have trouble obtaining authorization for additional loans in the future.
  • Threats of arrest or imprisonment: Although it is unlawful for a lender to threaten you with arrest or detention, they may do so. If you get a threat like this, contact the attorney general’s office in your state immediately.

Is there a possibility of being sent to prison? There are no dangers, yet they are prevalent.

If you don’t pay back a loan, you’re not breaking the law. Because of this, lenders cannot threaten their customers with arrest or imprisonment. Even yet, some payday lenders have successfully utilized bad-check regulations to file criminal cases against borrowers, with courts incorrectly rubber-stamping the allegations.

The Consumer Financial Protection Bureau recommends contacting your state attorney general’s office to avoid being arrested for nonpayment. Even if the criminal complaint was filed incorrectly, you should never reject a court summons to appear.

The Best Way to Rebuild Credit After a Payday Loan Default

The worry and anxiety of being in arrears on a payday loan cannot be overstated. The good news is that you have options for repairing your credit and limiting the damage. Here are a few pointers to get you started.

  • Reduce your costs, take up a part-time job, or side hustle to get current on debt payments if you don’t have the money. Debt consolidation, a debt management plan, or credit counseling are viable choices.
  • Stay on top of your financial obligations. Paying all of your costs on time is essential. Sign up for automatic payments or reminders on your calendar. This method may ensure that your mortgage, credit cards, and vehicle loans are paid on schedule.
  • In other words, your credit utilization ratio measures how much credit you’re utilizing compared to how much you have available. No more than 30% of your available credit should be used, ideally less. You may achieve this goal by limiting your expenditure and maintaining a low balance.
  • Keeping an eye on your credit report is essential. Regularly checking your credit report should become a habit. Your Equifax and TransUnion reports are available for free at AnnualCreditReport.com.
Luke Pitt