Payday Loans Debt Consolidation

10 Things You Must Know About Payday Loan Debt Settlement Law And Other Relevant Laws

If you are considering negotiating with your lenders on how to settle your debts, it is very important for you to be well aware of at least the basic things about payday loan debt settlement law. In fact, in addition to the provisions of this law, you must also keep in mind what several other relevant laws say about your legal rights. Some of those other laws include Truth in Lending Act, the Fair Debt Collection Practices Act and many others. If you are hiring a debt settlement agency to assist you with the process, you must also have a thorough understanding of the new laws that have recently been imposed to regulate all those organizations that claim to offer debt relief services. You will find the following information very helpful in this regard.

Your Lenders Cannot Force You To Liquidate Your Assets

As per payday loan debt settlement law, your lenders do not have the right to force you to sell some of your assets, such as your car or other property, in order to settle the debts you owe to them.

Your Lenders Cannot Garnish Your Wages To Settle Payday Debts

Likewise, payday loan companies are also legally prohibited to force wage garnishment on you. In fact, the Fair Debt Collection Practices Act even prohibits them from contacting any third party (including your employer) and talk about your debts. The only situation when they can contact a third party and enquire about you is when they are having difficulty in finding your whereabouts. They cannot meet your employer and ask them to transfer a part of your salary to them because you owe them certain amount of debts. Always remember, wage garnishment and liquidation of assets to settle payday debts is possible only if there is a court order regarding the same. In the absence of a court order, if a lender makes any such attempt, it will be considered as an illegal activity; you can even file a criminal lawsuit against them.

Your Lenders Cannot File Criminal Lawsuits Against You If You Do Not Settle Your Debts

However, the interesting thing is that payday loan debt settlement law prohibits your lenders from filing criminal lawsuits against you. As per the laws, nonpayment of payday loan debts is not considered as a criminal offence. Therefore, if your lender is threatening you that they will send you to jail if you do not settle the debt, this is a fake threat; in fact, it is harassment, which you can take legal action against.

Your Lenders Cannot Harass You Physically Or Emotionally Or By Any Means

The FDCPA (fair debt Collection Practices Act) is applicable for payday lending as well. As per these laws, you have the right not to be harassed by your lenders or debt collection agencies. They cannot misbehave with you or abuse you just because you fail to repay the debt. They can give you phone calls, but only between 8 am and 8 pm. They cannot disturb you by giving late night or early morning calls to you. In fact, if you request them in writing that you do not want them to call you at all, they are legally obligated to honor such request.

Your Debt Settlement Company Must Not Charge Their Fee In Advance

Payday loan debt settlement law has also imposed several provisions to regulate debt settlement companies as well. For example, if you have signed up with a debt settlement agency to talk to your lenders on your behalf about loan repayment, the agency are legally prohibited to charge their fee upfront. The laws have made it mandatory for them to first fulfill the promise they make to their clients and then charge their commission.

Your Debt Settlement Agency Must Give Full Disclosure Of Their Services And Fees Through A Written Contract

What is more, payday loan debt settlement law also requires debt settlement organizations to offer a written contract to their clients, where all the provisions, especially regarding their services and fees, must be made very clear. Therefore, you are advised to read the fine prints thoroughly before you sign up for any such service. Do not forget to check the ‘disclosure box’ in the contract; it will provide you a very clear picture about the service and its cost.

Your Lenders Are Not Legally Obligated To Accept Any Settlement Deal That You Propose To Them

However, it is very important for you to keep in mind that just because you have hired a debt settlement agency and that the agency claims to have ‘proven’ settlement programs, it does not obligate your lenders to accept any proposal that you or the agency make to them. It is entirely up to your lenders to decide whether they should accept or reject your proposal.

Your Lenders Can File A Civil Lawsuit Against You If No Settlement Deal Works Out

Though payday loan debt settlement law prohibits lenders from filing criminal lawsuits against you, they still have the right to file at least a civil suit. When they file such a lawsuit, the court sends you a notice. You must respond to this notice immediately (with the set time frame as mentioned in the notice itself). Make sure you attend any resulting court hearing. You absence in a court hearing or failure to reply to the court notice will be considered as contempt of court and you can be punished for the same.

Your Wage May Be Garnished Or Certain Assets May Be Liquidated If The Court Orders

If the court finds out that you do owe certain amount of debt to your lenders and that your monthly income is not strong enough to settle those debts, the court may issue an order to liquidate some of your assets or to garnish your wage.

If It Is Proved That Your Lenders Are Running Their Business Illegally, You Are Obligated To Repay Only The Principal Amount

Last, but not the least, if you find out that your lenders are running their business illegally, such as without proper license, you will be legally obligated to repay only the principal amount. Besides that, you can file complaints against your lenders with the Federal Trade Commission and your State Authority.

Overall, awareness of payday loan debt settlement law as well as other relevant laws is very important. The more informed you are about your legal rights and obligations, the more efficiently you will be able to protect yourself.


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