Can I be arrested for default on payday loan? : A big question
Can I be arrested for default on a payday loan?
A big question for payday loan seekers needs to be answered. At this time, you cannot be arrested for defaulting on a payday loan. If you default on a payday loan, that lender can take the same action as any other creditor in an attempt to collect the unsecured debt. According to the Fair Debt Collections Practices Act (FDCPA), it is illegal to threaten a person with the possibility of being arrested for non-payment of a debt. It doesn't matter if you receive a threat about being arrested; it's ot going to happen, period. That is one concern out of the way. However, there are other issues to consider when you default on a payday loan.
Generally, payday loans work by writing a postdated check to the lender. If you do not have enough money in your checking account to cover that check when the lender submits it to you bank, your checking account will be overdrawn. If you are unable to bring your checking account current, you will be reported to banking systems and may face problems gettting a checking account at a different bank.
Defaulting on a payday loan can lead to the rapid increase of fees and penalties. Payday loan companies can raise your interest rate higher than most other creditors. The interest and fees added on will increase with time, making it exponentially more difficult to pay off the payday loan.
In addition to increased interest and fees, there is the matter of your credit score which will decline steadily as the payday loan remains unpaid. If you are continuously late in making the payday loan payment (or you don't pay them at all), youre credit score will be drastically lowered within just a few months time.
If you start to get behind with your payday loan payments, you need to take immediate action. Call the lender and discuss the situation with them. They would rather work out a payment plan with you than see that debt go to a collections agency. It is in your best interest to be proactive and take control of the situation before it takes control of you.
CONTRIBUTED BY: DebtConsolidationCare Community