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Payday Loan Blog - Can You Go to Jail for Not Paying Back a Payday Loan?

 Tuesday, 04 December 2007

Considering the difficulty that some people have paying back a payday loan, its no wonder we receive so many questions about the consequences of failing to pay back a payday loan. This one specifically asks if you can be sent to jail for not paying back your loan. Before we get to that, let’s talk about how people even get to the point of wondering this type of question. What typically happens is someone takes out a payday loan and doesn’t realize they only have about two weeks to pay back all of that money plus interest. Left with few other options, they take out another payday loan so they can get by till their next check, but once again, they’re in the hole. After going through this cycle a couple times, many people simply cannot afford to take out another loan, so they avoid all contact with the lender. That’s when they wonder if they’re doing something illegal that they could be jailed for. The short answer to that question is no, you cannot go to jail for not paying back a payday loan. Some payday loan companies may try to tell you that you can go to jail because not paying back the loan could be considered check fraud, but they’re just making threats in hopes that you’ll pay. However, that doesn’t mean that a payday loan company cannot take other forms of action against you.

What Legal Action Can Be Taken Then?

While you can’t go to jail for failing to pay back your payday loan, keep in mind that lenders have other means of getting their money back. Payday loan lending is still a fairly new concept in terms of the law, so there is no uniform way in dealing with it and many states have different laws regarding it. If your payday loan lender can’t get you to pay back the loan on their own or through a collections agency, there is the possibility that they could take you to court over the matter. Lenders have the right to collect delinquent loans using all of the legal remedies, this includes filing a judgment or civil court action. With the help of the courts, payday loan lenders could garnish your wages or force you to sell of assets in order to pay the loan back. It’s an undesirable situation to say the least and can all be avoided by simply paying back your loans on time or at least contacting the lender. You might be surprised that some lenders are willing to negotiate a settlement or an extension on your payday loan in the interest of getting their money back. To sum things up, you cannot go to jail for not paying back a payday loan, but you can be forced to pay the money back if the lender takes you to court over it.

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Tuesday, 04 December 2007 11:28:04 (US Mountain Standard Time, UTC-07:00)  #     

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