Payday Loans

Can I Get Arrested or Go to Jail for Defaulting on a Payday Loan?

A common question often asked about payday loan debt is "can I get arrested for defaulting on a payday loan?" There are two main reasons why this question is raised. First, many unethical or illegal collection agencies will insinuate or claim outright that you can be arrested if you do not pay a payday loan debt. The second is that bad check laws do allow for criminal prosecution of those who write bad checks and since payday loans often require a check, consumers fear these laws will be used against them in a payday loan collection situation. Here we give you the straight facts on payday loan debt and arrest.

Payday Loan Collectors - Implying that you can be Arrested for Payday Loan Debt
Unfortunately, it is an all to common practice for Payday Loan Collection Agencies to imply that consumers can be arrested for payday loan debts. In some cases, these payday loan collection agencies have had fines or actions taken against them by the FTC or other state attorney generals for claiming to debtors that they can be arrested if they do not pay. However, the more frequently used approach is to imply that being arrested is a potential repercussion of not paying.
Some techniques used by payday loan collectors to imply this include: 1) referring to consumers with multiple overdue or defaulted payday loans as "repeat offenders," 2) asking the debtor if they know that writing a bad check is illegal in their state. Technically, this is true. However, the payday collectors omit that this does not apply to checks written in the process of getting a payday loan, or 3) telling customers that they "will be located and addressed in accordance with city and state law" if they do not pay their debt by a certain time (usually the same day). Again, this is technically accurate. But, what "located and addressed" means in this case is that they will find your address and mail you a letter. Payday Loan Collection Agencies use these ambiguous statements to purposely mis-lead consumers. While the statements above are not factually false, the Payday Loan Collectors are well aware of the misunderstanding that they are creating and do nothing to clarify it in most, if not all, cases.

The Truth About Payday Loans and Criminal Charges
Quite simply, the answer is that defaulting on a payday loan will not result in criminal charges in any state within the United States. Bad Check Laws are designed to protect merchants from having someone "buy" goods with a bad check, thereby essentially stealing. They are not designed to protect Payday Loan Companies who know that they are taking a risk that a consumer will not pay a loan back. However, there are other important repercussions associated with not paying a payday loan, including the potential that consumers will be sued in civil court (usually small claims courts). This can lead to a writ of garnishment being filed and customers having their wages garnished. Even being sued in small claims court will result in you being served by a process server, an experience that can be very embarrassing, especially if it happens at your place of employment. Many payday loan companies will also report to bad check databases, such as SCAN, and that may prevent you from getting a bank account in the future. Additionally, most Payday Loan Collection Agencies will now report your debt to the major credit bureaus which will impact your credit. So, there are definite repercussions to not paying a payday loan when it is due, however, going to jail is not one of them.

Brent Hagen is a Senior Debt Specialist with Payday Loan Debt Assistance. Brent has over 15 years experience in consumer finance with a specific focus on subprime, credit cards, payday loans and collections. To learn more about Payday Loan Debt Assistance's payday loan debt program, you can visit their website at http://www.paydayloandebtassistance.com/.

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Top 10 Considerations Before Deciding on Whether to Get a Payday Loan

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The payday loan service allows people to gain access to short term funding, for relatively small loans, fast. Before deciding to go down this credit route, you should make certain considerations to ensure that you are deciding on the best option for your situation.

1) Do you really need a Payday Loan?

Is it absolutely essential that you take out a payday loan? Or can that new outfit / ipod or week-end away wait?

If paying for something that you want, and the additional money in interest payments for a payday loan to be able to buy it, is going to stretch you so that you run out of money next month, then perhaps you should consider whether you could rather save up and buy what you need at a later date, rather than borrow money to pay for it.

Of course, if you are aware of the additional costs of buying or paying for something at the time you want it, and are happy with these, and can afford them from your next wage payment, then there should be no problem taking out a payday loan.

2) What is the length of time you need a cash advance for?

Cash advance payday loans are short-term loans. They are designed to bridge the gap between now and your next payday. If you need to borrow money for a lengthy period of time, then a payday loan won't be ideal.

You can extend the repayment of a payday loan to a subsequent payday by paying the interest payment each month until you clear the full balance. However, the more you do this, the more your original loan costs you. So, if you plan to gain access t some additional money for a long period of time, you should look for alternative forms of credit.

3) How much money do you need to borrow?

Payday loans are typically valued between £80 - £800. However, payday loan providers are not likely to lend you £800 if you only earn £800 as the idea is that you can afford to pay back the payday loan on your next payday.

So, if you are looking to borrow more than £800 and/or more than you can afford to pay back on your payday, then you should look for alternative forms of credit.

4) Do you meet the criteria for a payday loan?

The criteria for most payday loans are as follows:

- To be over 18 years old
- To be a UK resident
- To be in full time employment
- To have a debit card for the bank account one's wages are paid into.

By their very title, you are required to be in full time employment when applying for a payday loan. If you are a student or currently unemployed, you will not be able to apply for a payday advance.

Obviously, if you don't meet these, then you will not be eligible for a payday loan.

Some payday loans companies also require that you have a cheque book. However, there are enough payday loan providers that don't require this that you should be able to borrow from one that does not require this.

5) Are your wages paid directly into your bank account?

Most, if not all, payday loan companies will require a direct bank transfer of your wages onto your debit card account. If you are paid by cheque or cash, you will, therefore, not be eligible for a payday loan.

6) Can you afford to pay a payday loan back?

If you know that you are not going to be able to afford to repay a payday loan, then you should look elsewhere for a solution to your credit problem.

Payday loan providers will allow you to extend a payday loan by paying the interest each month until you can clear the full payday loan. However, it is not advisable to take out a payday loan planning to do this because it will make the cost of your cash advance more expensive than if you paid one interest fee for the advance.

7) Are you aware of the different processes involved in applying for a payday loan?

You need to decide what is important for you when applying for a payday loan. Some companies require that you provide various forms of documentation, including bank statements, on which to base your loan approval. This process can mean that you can't receive a same day payday loan. If you want to get your cash advance as quickly as possible with the easiest application route, then you should look out for payday loan providers that offer same day instant cash loans online. You will then be able to apply online, receive an instant approval decision and get your cash that same day. Very often, however, they will carry out a credit check in order to be able to make the application process as quick as possible and to be able to offer faxless payday loans. If you do not mind having a credit check on your credit report, then this is a good route to be able to get cash fast.

8) Are you aware of the cost of a payday loan?

Before deciding to take out a payday advance loan you need to be aware of the costs and make sure that the benefits outweigh the costs for you.

Most payday loans companies charge an interest fee of 25% of the loan - although some charge more than this, so be sure to find one that doesn't charge more if you decide to go with a payday loan.

All finance companies are required to quote an APR (Annual Payment Rate). At a 25% cost of credit for a loan due for repayment 31 days away the typical APR is 1286.1%. While this looks extremely high, one needs to bear in mind that APR involves looking at the payment rate annually, when a payday loan is due for repayment after a month. What is important is the cost of credit within that month - typically 25%. So, for every £80 you borrow, you need to pay £20 in interest. You need to consider whether you are happy to pay this amount of interest to be able to take advantage of the fast cash payday loan service.

9) Are you in a position where your credit and debts are getting uncontrollable?

If you already have a lot of outstanding credit / debt and are battling to meet monthly payments, then you should consider that a payday loan may not be a good option for you.

A payday loan should not be used as a means of solving long term credit / debt problems. If it is used in this way, it will more than likely only add to these problems. You should only take out a payday loan if you are going to be able to afford to pay it back and only if it is used for a short-term credit problem.

10) Is a payday loan your best option?

You need to consider what alternative options are available to you at a particular time and assess whether the benefits of a payday loan outweigh the benefits of its alternatives, also taking into account the cons, including costs, of the various options.

There are times when a payday loan may be a good option at a certain time and/or in a certain situation. You need to weigh up the costs and the benefits and decide whether it is the right form of credit for you at a particular time.

Ashleigh Preston - Marketing Manager - Payday Express offers a fast, effective service which is completely confidential. Range of loans includes payday loans, bridging loans and cash advance loans. They understand how costly life can be and how long the wait is until the next payday. For interviews, quotes, images or comments contact: Ashleigh Preston Marketing Manager Payday Express Phone: 02088 601 161 Email: ashleigh@expressfin.co.uk
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