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Can I go to Prison for Not Repaying a Payday Loan?

By November 24, 2021June 28th, 2022No Comments
payday loan prison

Can I go to Prison for Not Repaying a Payday Loan?

Payday loans may appear to be a practical and short-term option when you want instant cash to meet a financial emergency. These loans, however, come with significant interest rates and costs.

You cannot be imprisoned for not repaying your debt. If you are sued for outstanding debts, you will be taken to a civil court. However, in rare circumstances, a civil debt collection lawsuit might turn into a criminal prosecution, putting you in jail. However, the case will carry on if the following happens.

If you fail on a loan or breach the conditions of your loan agreement, a payday lender can take you to court. They may, however, only bring you before a civil court, not a criminal court. So, in most cases, a payday lender will threaten to sue, but they will be unable to do so.

If a borrower cannot afford legal representation, they should appear to their court summons.

If you are in disobedience to a court or an order

Creditors must sue you and get a court-ordered financial judgment to recover a consumer debt that has not been paid backed by collateral. If you fail to comply with a civil court order and get a notice from a payday lender ordering you to appear in court, you may be charged with contempt of court. An arrest warrant can then be issued if the civil action is transformed into court proceedings.

If you don’t appear in court

Even if the firm isn’t yours, you should not disregard any court notification you get. If you fail to appear in court or obey the directions, you may face legal consequences. This might indicate that you passed up a chance to settle the debt and work out a payment schedule.

How do you know if your debt case is legitimate?

If you are sued, keep in mind that your debt is subject to a statute of limitations. A debt collector can sue you or threaten to sue you after the period of restriction has passed. This payday loans are “past due.”

Depending on the nature of debt, these laws might run anywhere from between three and six years. There are exceptions to this rule. In Maine, for example, the period of restriction for debt on a credit cardis six years, but in New Hampshire, it is just three years. It is, however, ten years in Rhode Island.

What happens if I don’t pay my bills on time?

Credit will be severely harmed

 Even if you don’t wind up in prison, it might have long-term effects. Your credit score, as well as the credit history of any bills you’ve racked up, may be impacted. This may affect your ability to acquire another credit card, or home loan, as well as your ability to lease a vehicle.

It’s possible that your assets will be seized

If you have used collateral to secure your loan, such as your home or a vehicle, the creditor may be able to seize such assets in order to repay what you owe.

Wage garnishment is a possibility

Wage garnishment happens when a creditor obtains a court or government agency order directing your boss to refuse to give you a raise of your earnings and to return a letter to your creditor. The amount that can be garnished is determined on the type of debt and the amount owed. the garnishment rules in your state.

If you fall you owe money on a federal student loan payment as well as the lender is unable to contact you to work. They may be able to work out a payment plan with you. go to court to have your earnings garnished. If all previous avenues have failed and the Department of Justice has been called to collect your student debt, this is generally the last resort.

What steps should you take to get out of debt?

1. Make a list of your debts.

Begin by going through everything in your credit card debt. It’s conceivable that you’ll discover that your loan is past due. It’s possible that the debt isn’t yours. Debt collectors can often make mistakes or defraud individuals.

2. Get in touch with your creditors

Although speaking with financial institutions that threaten you might be uncomfortable, it can help you save money. Creditors simply want their money back. If you retain your calm, creditors will frequently listen to your tale and be prepared to work out a solution.

3. Seek the assistance of a credit counselor.

If you believe your financial circumstances has spun a situation that is out of control qualified expert can assist you with your present debt issue.

A credit counselor can help you in developing a comprehensive financial plan that will ensure you do not find yourself in a similar scenario again. This includes assisting you in creating a budget, making a strategy to help you remain on top of your expenses, as well as giving tools to help you stay organized.

4. Enroll in a debt management company  plan

If you have many creditors, a debt consolidation program is an excellent choice. Non-profit credit counseling companies provide this service, which helps clients get out of debt in between three and five years.

Longer repayment schedules are common with debt consolidation loans. Depending on the rate you qualify for, this might result in you paying more in interest over time than if you paid off each payday loan lender separately.

Seek advice. Credit counselors will help you negotiate lower interest rates and combine everything your payday loan debt into one easy-to-manage monthly payment . After that, the advisor on credit will tell you how to make the payment. He or she will be divided funds into installments for each of the payday lenders.


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Frequently Ask Questions

A payday loan (sometimes referred to as a cash advance or a payday advance) is a small loan borrowed for a brief period of time, often until the borrower's next payday. These short-term loans feature high interest rates and need no collateral (unsecured loans). It is not advised to use payday loans for an extended period of time. The rates and terms of payday loans vary by state.

A title loan (sometimes referred to as a title pawn or a car title loan) is a short-term loan where the vehicle title serves as collateral. Due to the fact that lenders of title loans do not verify borrowers' credit histories, these loans are popular among those with poor credit. Typically, title loans are taken out by borrowers who need cash quickly or have financial issues.

Unsecured loans, such as payday loans or installment loans, are supported solely by the borrower's creditworthiness, as opposed to secured loans, which need collateral. Secured personal loans include car title loans and pawn loans, for example.

State rules determine the maximum amount you can borrow as a short-term loan. In certain states, short-term loans (also known as payday loans) are prohibited, while in others they are permitted with a maximum loan amount. Visit our rates and terms page to get state-specific lending conditions. In addition to state legislation, additional factors may alter the conditions of your loan.

A personal loan that is repaid over time with a predetermined number of periodic payments or installments is known as an installment loan. Due to the lower APR, installment loans can be taken out over a longer term than payday loans. Installment loans are commonly seen as a preferable alternative to payday loans. Typically, installment loans are repaid in predetermined amounts that include both principal and interest.

The Annual Percentage Rate, or APR, is an annualized version of your interest rate. When picking between several types of loans, the APR assists in comparing the costs of each. The annual percentage rate (APR) for a loan may include costs, such as origination fees. Remember that while APR is essential, it is only one of several elements to consider when selecting a loan.

Yes. Your credit score is not the only criteria taken into account when analyzing your loan application. However, a low credit score can result in higher interest rates and fewer lending possibilities. A title loan is a popular option for consumers with poor credit because title loan lenders do not consider credit history.

Credit score ranges differ depending on the credit scoring algorithm employed and the credit bureau that generates the score. According to FICO, a credit score between 300 to 579 is poor or very poor. A satisfactory credit score ranges from 580 to 670. Credit scores are determined differently depending on the credit scoring model's parameters, such as payment history, amounts owing, length of credit history, etc.