What Happens When Your Debt Account Goes To Payday Loan Collections?
When you fail to make the repayment of your payday loan bill, your account is referred to the payday loan collections department. After that, you will start getting calls from debt collectors, most probably repeatedly. Though payday lending collections are very much similar to the collection practices in other types of lending, there are still some key differences.
Fair Debt Collection Practices Act Applies
Payday lenders are very much like other lenders who just want their money back. They just want to collect the outstanding balance along with interest and fees as applicable. The FDCPA () applies to these lenders also. The Act constitutes of federally mandated rules of conduct, which all collection agencies including the ones associated with payday lending must adhere to. The best thing about this legal code is that the provisions and restrictions out there have been explained in plain and clear language. The FDCPA has defined certain do’s and don’ts for payday lenders when it comes to payday loan collections.
Payday Debt Collectors Are Usually More Aggressive
As compared to other debt collectors, the collection agents hired by payday lenders are usually more aggressive when they give phone calls to the debtor or visit them personally at their home or at work. Payday lenders mainly target high-risk consumers, especially the ones who live paycheck to paycheck. After all, why in the world would people who have extra money need to borrow small cash advances? These types of consumers come under stress very easily and they are often not even aware of , let alone how to use the same. Debt collectors try to take advantage of their ignorance. But, the ones who educate themselves about their rights and know how to protect the same can deal with even the more aggressive collection agents more efficiently. Here is a step-by-step guide on .
Multiple Times Check Bouncing Results In Additional Penalty Charges
When you sign up for a cash advance, you are often required to give a post-dated check to the lender. This check works like a collateral against the money you borrow. When you fail to make the repayment on your own, the lender sends the check for payday loan collections in an attempt to withdraw money directly from your checking account. But, if you do not have sufficient fund in your account, your check will bounce. As a result, your debt account will further be charged with a hefty amount of penalty as check bouncing fee – but this time, you are hit twice; both your bank as well as your lender charge a certain amount of check bouncing fee separately. Some lenders keep on sending the same check again and again for collection, and this way, the overall debt burden keeps on increasing. Here, it is important for you to keep in mind that the laws in many states prohibit lenders from sending the same check for collections more than one or two times. Here are the .
Payday Lenders Are Quite Unlikely To Sue You For The Payment
Probably, the main reason why lenders are often more aggressive in payday loan collections is that they have to collect a relatively small amount of loan. In case of other lending programs, where the loan amount is big, lenders can even file a lawsuit against the borrower. But, in this case, where the aggregate loan amount is very small, it can turn out to be a very costly affair for the lenders if they sue a borrower for the payment. That is the reason payday lenders focus more on collecting the money themselves without getting into the legal hassles. In this series, they often end up getting more aggressive in their behavior. Having said that, you still have the right not to be harassed. Now that you know that you are less likely to be sued, you can take this as your opportunity to negotiate a repayment plan with the debt collectors. Here’s a practical guide to .
Reporting Of Non-Payment To Credit Agencies
Because of the controversial nature of these lending programs that payday lenders offer, they often do not report the non-payment by the borrowers to the major credit bureau agencies in the US. But, they are likely to report the non-payment to payday-industry related payment tracking firms, such as DP Bureau and TeleTrack. Because of such reporting, you will become a very high-risk (unacceptable) borrower and you may not be able to get another cash advance in the next few years. This is, in a sense, good news; after all, even you do not want to get into this type of risky lending programs again.
Overall, don’t panic if you have failed to make the repayment and if your account has been sent to payday loan collections. Unless, you have borrowed the fund through fraudulent activities, the laws are on your side. Here are on how to get out of the horrible payday debt trap.