Can I Get Arrested or Go to Jail for Defaulting on a Payday Loan?
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/.
Article Source: http://www.articlesbase.com/personal-finance-articles/can-i-get-arrested-or-go-to-jail-for-defaulting-on-a-payday-loan-676937.html
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