Payday Loans

Is Not Paying Payday Loan Debt Punishable By Jail Time?

If you have , it means you have signed an agreement with the lender that you will repay the amount you have borrowed as per the terms mentioned in the contract. When you do not make the repayment in time, it will obviously be a breach of contract, which eventually will lead to certain legal consequences. But, it is important to note that not paying these loans does not come under criminal cases. The lenders cannot file a criminal lawsuit against you, but they have the right to file a civil suit. Though you are not likely to be sent to jail (unless you are engaged in fraudulent activities), the laws will make sure the lenders get their money back– it may even mean a forced bankruptcy. You should look for in such case.

Criminal Charges Cannot Be Brought Against You

Payday loan debt includes short-term cash advances that you borrow to meet your urgent financial requirements with a promise that you will repay the same on the next pay day when you get your salary credited into your checking bank account. The repayment method varies from one lender to another. In general, you have to give a post-dated check, which the lender can cash on the due date. Alternatively, you need to authorize the lender to debit your account on the set due date. If there is no money in your account on that date, the loan is automatically renewed with a certain amount of penalty charges. If you keep making defaults every month, it becomes a viscous cycle and a small amount of debt becomes a huge financial burden within a couple of months (mainly because of the high rate of interest and hefty penalty charges that keep on multiplying). Because of this particular nature of payday loan debt, the laws do not allow these lenders to bring criminal charges against the borrowers. Other conventional loans may qualify for a criminal case, but not these short-term cash advances. Not paying these loans is not a kind of legal offense that should be punished by jail time, mainly because the actual loan amount that you borrow is very small, usually not more than $1000.

Provision For Civil Suits

The lenders however have the legal right to file a civil lawsuit against you if you fail to make the repayment. These cases are usually handled in small claim courts, where the borrower may get a court order to make the repayment in full along with not only penalty charges and interest but also the court costs. If you still refuse to pay, your employer may get a court order to garnish your wages and pay it your lender. In case you no longer work anywhere, the court may consider liquidating some of your assets and properties to settle the payday loan debt in question. However, garnishing money that you receive as part of your Social Security Benefits is not allowed. If lenders still try to do any such thing, you can take legal action against them.

It is also important for you to understand that when a check is bounced or an electronic debit fails because of insufficient fund in your bank account, it results in certain amount of bank charges. If you fail to pay these charges, your bank may file a criminal lawsuit against you, which is punishable by jail time. Overall, make sure that you are well aware of the legal consequences of not paying payday loan debt before you make a decision in this regard.

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Posted in Payday Loan Laws, Payday Loans | 1 Comment »

One Response to “Is Not Paying Payday Loan Debt Punishable By Jail Time?”

  1. robert says:

    Payday loans are very easy to take on but it’s as difficult to repay these debts due to the high interest. Only one or two default installment makes the situation more complicated with accumulation of interest and penalty charges. If you have some consecutive default you will not find yourself in a condition to pay the huge amount and then the question will arise in your mind. “Is not Paying Payday Loan debt punishable by Jail Time”? You can get the answer in the article. Criminal charges can not be framed because the actual amount of such type of payday loans is generally very small. It’s not a time to be relaxed because creditors can file a civil law suit against you. The case will usually go to a small court and the decision may be like paying the amount to the lenders. If you do not have the money, the court will talk to your employer and if you do not work and no other option is there, the court can be declare you bankrupt.

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