Posts Tagged ‘disputing a payday loan lawsuit’

What Happens When A Payday Loan Lawsuit Is Filed?

If you have stopped making toward your payday debt accounts, the chances are that a payday loan lawsuit will be filed against you by your lenders. It is very important for you to understand that despite the unconventional nature of short-term cash advances, these loans work in a similar way as does any other loan. You sign an agreement to repay the amount you are borrowing after a certain period of time, on a set due date. If you do not keep this promise, you actually make a legal offence and your lenders have the right to sue you for the payments. The only relief is that the payday loan laws in the United States of America prohibit lenders from filing criminal lawsuits against such borrowers. It means there is no way you can be sent to jail for not paying back the payday loans. But, the consequences of a civil lawsuit can also be harsh ones, such as wage garnishment, forced liquidation of certain assets, and sometimes, even forced bankruptcy. At the same time, even borrowers have been provided certain legal rights in this regard, which you must be well aware of, especially of you are also one of those who are trapped into a viscous cycle of payday debt. You have the right to fight back. Following is a brief rundown on some of the basic things that you must know about such lawsuits.

Receiving A Court Notice

When a payday loan lawsuit is filed, you will receive a notice from the court informing you that your payday loan company has sued you for the payments in connection with certain debt accounts, where you have stopped making the payments. You can receive this court notice either manually (a sheriff’s deputy will visit your home) or through mail. You must file a response to this notice immediately because failing to do that will result in your lender winning the case automatically. Therefore, make sure you file an immediate response within 30 days, where you should tell the court that you have received the notice and you are ready to appear for the court hearings to defend yourself. It is very important for you to understand that just because you have received a summons, it does not mean that you have already lost the case; it only means that the case has just begun and you have the right to dispute the lawsuit.

Gather Proof Of Payments

Even if a payday loan lawsuit has been filed against you, the chances are that you have already made a certain amount of payment toward those debt accounts before stopping the payments. If so, gather all those payments receipts. You will have to provide these receipts as proof of payment. The court will look at the amount of money you already have paid and will try to determine how much money extra you need to pay to settle the debt in full. Here, it is important to note that there are certain limitations on the collection fees, interest, and other fees that payday lenders can charge on short-term payday cash advances. The court will look into the details if the lenders have violated any of those laws. However, you are strongly recommended to be aware of those laws and do your own research if any of the payday loan laws have been violated. You can hire an experienced lawyer if you find it difficult to do it on your own.

Provide Proof Of Financial Hardship

When you appear for a court hearing in relation to a payday loan lawsuit and you legally owe a huge amount to your lender, you will be asked by the court to explain the reasons why you stopped making the payments toward the debt accounts in questions. So, gather all necessary documents that can help you to convince the court that you are genuinely going through a serious financial hardship. If you succeed in convincing the court about it, it is very much likely that the court will; ask the lender to allow you to make the payment in easy installments over a certain period of time. If that is the case, you can even submit a payment proposal. Though the chances are that your proposal will be rejected, but you still have a good chance of winning a favorable repayment plan, which will make it easier for you to pay off your debts.

Wage Garnishment

If you fail to provide proof of your financial hardship in the court while you are disputing a payday loan lawsuit, the court may issue orders about wage garnishment. Wage garnishment is a process, where the court issues a notice to your employer to seize a certain portion of your monthly or weekly wages and send the same to the court; the payments are then transferred from the court to your lender. Depending upon the amount of debt you owe, this process may stay for several months, which means you will have to live with a much reduced income for a certain period of time. Wage garnishment also affects your credit score adversely. Therefore, you must try your best to avoid such things. You can visit the section “repayment strategies” in the “payday loan” category to get plenty of valuable information on how you can get rid of your payday debt problems and avoid lawsuits.

Overall, as you can see, a payday loan lawsuit can result in harsh consequences, but there are also ways to fight against the same. The more informed you are about the laws applicable in your state, the better you will be able to protect yourself.  Awareness about your legal rights is critical when it comes to dealing with civil lawsuits related to payday loan debts.

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