Payday Loans

What Are The Laws About Unpaid Payday Loans?

Though there are no specific federal laws about unpaid payday loans in the United States of America, many states have enacted special laws to regulate this form of lending. In most states, the laws are strict on lenders and are more favorable to consumers. Therefore, if you are struggling with payday loan debt problems, it is very important for you to be well aware of the legal provisions related to your situation. The more informed you are about the payday loan laws applicable in your state, the better you will be able to handle your debt situation and manage your finances. Unless you know about the possible legal consequences that you may have to face for not making timely repayment toward payday debt, you will not be able to protect yourself. It is also important to note that the laws have provided you certain legal rights and imposed restrictions on debt collection practices by lenders and collection agencies. Following is a brief rundown on some of the basic things that you must be aware of in this regard.

Limitations On Collection Fees

The laws about unpaid payday loans though vary significantly from one state to another, there are still many things common in most states. For example, the majority of states have imposed certain limitations on collection fees. As per the laws in most states, lenders cannot charge more than $30 as NSF (Non sufficient fund) fee, that too, only once. It means if you do not have sufficient fund in your bank account and if that causes the check send by the lender for collections to bounce, the lenders are allowed to charge a NSF fee of up to $30. Many lenders keep sending the checks again and again for collections so that they can keep charging the NSF fee again and again; such practices are now illegal in most of the states.

Criminal Prosecution

You have not committed any criminal offence by not paying back the payday loans unless you did this as part of a fraudulent plan. As per the laws about unpaid payday loans, nonpayment on such debts is a civil offence and lenders can file only a civil lawsuit against you, not criminal lawsuits. Therefore, if you are receiving threats from your payday loan company or from the debt collection agency that they are going to file an FIR or that they are going to send you to jail, you must not get scared of such false threats. You can instead tell them that you are very well aware of the laws and that you also know that you have the right not to be harassed by such threats. If they keep harassing you like this, you can file a complaint against them. In fact, debt collection harassments are considered as a criminal offence. It means it is you who can actually file a criminal lawsuit against the lenders and debt collection agencies that are harassing you. However, it is important to note that even civil lawsuits must not be taken lightly. When the court has to interfere and give a judgment, it often goes against the borrowers provided the lenders are legitimate ones and that they are not violating any laws. Some possible consequences that you can expect as part of such civil lawsuits include wage garnishment, liquidation of some of your assets, and an array of other such things.

Statute Of Limitations

The laws about unpaid payday loans also have specific provisions regarding the statute of limitations on such loans, which varies significantly from one state to another – it can be one year, two years, three years, four years, or even six years or more. The point here is that if you are being contacted by your lenders or debt collection agencies for some very old debts, you must determine the age of those debt accounts and find out if the statute of limitations has already passed. If the statute of limitations has already passed, you cannot be held liable to make the repayment on those debt accounts as per the laws.

Overall, the laws about unpaid payday loans have been designed in a way to provide protection to both debtors and creditors.

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