Defaulting on a payday loan can have serious consequences. Depending on where you live, this can result in liens against your property, wage garnishment, bank overdraft fees, collection calls, damage to your credit score, and even a day in court. If you can't pay off the loan, the payday lender will eventually turn it over to a third-party debt collector. Collection agencies may be more aggressive than the original lender in their efforts to recover the debt. The law states that a collection agency cannot confiscate your property without a court order.
Since payday loans are unsecured debts, the collector must win a case against you in civil court before they can garnish your wages. Payday loan debt collectors don't waste time when you owe money. If they can't access your bank account directly, they may decide to get a garnishment order. This court order allows them to take money from your paycheck or bank account to pay off the debt. If you're concerned about defaulting on a payday loan, bankruptcy may be the best solution.
Filing for bankruptcy will make all creditors' collection efforts cease immediately and can eliminate most of your debt. At some point, the payday lender might send your debt to collections. In the end, you may owe the amount you borrowed plus fees, overdraft fees, returned check fees, collection fees, and court costs if sued by the payday lender or collection agency. When you take out a payday loan, you agree to allow the lender to withdraw money from your bank account for payment. The total loan amount and any charges are usually due in full within 14 days or at the time of your next paycheck. If you don't have enough money to repay the loan in full by then, lenders will allow you to continue with the loan but additional fees will be charged. With a lawsuit judgment, the payday lender can get court permission to garnish your wages or bank account.
Email addresses and toll-free phone numbers are often the only way to contact them. Yes, but you must cancel (“rescind”) it on or before the business close of the next business day after you apply for the loan. This typically includes additional charges such as a significant late fee and an interest charge for the additional time taken to repay the loan. Payday loans must be repaid in full on their due date. Loans are due within 14 days or when you receive your next paycheck. While other types of loans are repaid in monthly installments. If you can't pay off your loan on time, lenders may allow you to continue with it but additional fees will be charged.
With a lawsuit judgment, they can get court permission to garnish your wages or bank account. You may also be able to refinance your outstanding amount with a new loan in some states. Meanwhile, the outstanding payday loan balance may increase as fees, interest, and penalties are added. Before you know it, the loan enters a scary sounding state such as Default or Collections and you begin to receive ominous messages from the payday lender or collection agency. If you try to pay off your loan before the deadline but the lender charges you a fee or refuses to pay off your loan, immediately inform DFI (Department of Financial Institutions).