It is illegal for a payday lender to threaten to put you in jail or criminally prosecute you for an unpaid debt. If this happens, you must immediately file a complaint with the DFI. The short answer is yes, a payday loan company can sue you in court if you don't pay your debt. To be taken to court, you must be behind on your payments and have violated your loan agreement.
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. Even if desperate circumstances led you to apply for a payday loan and you are struggling to repay it, you are still entitled to protection from abusive debt collection tactics. No lender, not even a mall cash advance company, can harass and threaten you in an attempt to collect a debt.
Failure to repay a loan is not a criminal offence. In fact, it is illegal for a lender to threaten a borrower with arrest or imprisonment. However, some payday lenders have succeeded in using bad check laws to file criminal complaints against borrowers, and judges have erroneously sealed complaints. Alternatively, you can offer to repay a certain amount of the loan in exchange for forgiving the remaining amount.
A payday loan is repaid in a single payment on the borrower's next payday or when income is received from another source, such as a pension or Social Security. Make sure you understand how the loan will be repaid and how much it will ultimately cost before you agree to the terms of the loan. Unfortunately, yes, any creditor, including payday lenders, has the right to sue you and take you to court if you fail to meet your payments or violate your loan agreement. The bank or credit union then withholds an amount for the payday lender or collector as permitted by your state's law.
Mobile Paycheck Advance Apps work with iPhone and Android, and many offer payment on the next payday. If you insured your loan with some form of collateral, such as your house or car, the creditor can recover those assets as a way to pay what you owe. These are short-term online loans with small to medium balances and interest rates that exceed typical legal limits. 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.
Some cash advance companies also offer an electronic option where funds are transferred to the borrower's bank account and then withdrawn by the lender on the borrower's payday. No creditor of consumer debt, including credit cards, medical debts, payday loans, mortgages, or student loans, can force you to be arrested, jailed or placed in any form of court-ordered community service. If you reach an agreement with the payday lender, be sure to do so in writing for future reference if necessary. A payday loan is actually a cash advance secured by a personal check or paid by electronic funds transfer.
Bankruptcy Code, bankruptcy will pay off your payday loan debt, along with unpaid utility bills and payday debt.
