You may be arrested for not repaying your payday loan in some circumstances. While it is against the law to be jailed for debt, if you do not show up in court when you are sued for the debt, the creditor may obtain an arrest warrant against you. You can use SoloSuit to respond to a lawsuit for unpaid payday loans and prevail in court.
Payday loans help many working Americans who cannot access traditional loans meet their financial needs, so it should come as no surprise that about 12 million Americans use them each year.
When you need quick cash to deal with an emergency, payday loans may seem convenient and provide a short-term solution. However, these loans attract high-interest rates and fees. The most frequent reason for payday loan default is this drawback.
Can you go to jail for not paying a payday loan?
You may worry about the repercussions if you have defaulted on your payday loan. Even though some people might be concerned about going to jail for not repaying their payday loans, is this even legal?
The short answer is no. You cannot be arrested for not paying a payday loan. However, if you fail to appear in court when you are being sued for a payday loan debt, you could be arrested. Let us explain.
According to CNBC, there have been reports of individuals getting arrested for falling behind on their payday loans. This type of arrest normally occurs if the debtor fails to appear in court for their case hearing and not specifically for owing the debt. After you miss your court date, the payday loan representative can request the court for a warrant of arrest for contempt of court, and you may find yourself in jail until you pay bail or make a down payment on your loan.
ProPublica shares several stories of consumers who spent hours or days in jail for owing a debt with a payday loan company called Loan for Less and failing to appear in court. However, the consumers were technically jailed for contempt of court charges for not appearing at court hearings after ignoring a payday loan court Summons.
In the majority of states, it is unlawful for a creditor to even suggest that a borrower be arrested.
Can a payday lender sue you?
A payday loan lawsuit is particularly feared by many people who have defaulted on their loans. Understandably, they don’t want to be in court because they have defaulted on a loan.
Payday lenders are skilled at threatening you in various ways, but can they actually sue you? The answer is yes. If you default on a loan or break the terms of your loan agreement, a payday lender may sue you in court.
They cannot, however, take you to a criminal court; only a civil court The majority of the time, a payday lender will threaten to sue but not actually do so. Heres why.
First of all, paying for legal representation in court is expensive. Second, rather than taking you to court, most lenders would prefer to negotiate with you and come to an out-of-court agreement. When a payday lender sues you in court, they are betting that you won’t answer the summons, which will persuade the judge to grant them a favorable judgment. The judge may impose a wage garnishment in this situation.
You can use SoloSuit to file an attorney-approved Answer to avoid a default judgment.
How to deal with debt collectors
Debt collectors start calling you day and night once you are in default on a payday loan. Some even threaten to have you arrested. This can be very stressful, particularly if you want to pay the debt but are unable to do so because of financial difficulties.
But theres no reason to worry; the Fair Debt Collection Practices Act (FDCPA) protects you by prohibiting debt collectors from:
You can take the following steps if a debt collector threatens to have you arrested and harasses you repeatedly:
The organizations above exist to safeguard you from unethical business practices. When you file a complaint with these organizations, they will contact the designated payday loan provider.
Lets look at a real-life scenario;
Example: Bill owed $920 to Horizon Gold on his credit card. He had been in default for a year when he started getting calls every day. When Bill asked the agent to stop calling and send him communications in writing, the agent rudely reacted and threatened to arrest him. Then he sent a Debt Validation Letter to ask them for more details regarding the debt. HG did not respond to the request. Bill thoroughly reported the issue to the CFPB and provided feedback on their BBB profile. Horizon Gold has been warned by the CFPB to address Bills’ complaints or face consequences. HG apologized to him for not responding to the Debt Validation Letter when he contacted him. Once they sent the validation notice, they made him an offer to settle the debt for 50%. HG accepted Bill’s counteroffer, who then countered with his own offer. Bill pays 30% of the debt and marks the dispute as resolved with the CFPB and on their BBB profile.
Send a Debt Validation Letter to debt collectors
Try sending a Debt Validation Letter in response to the first contact you receive from a debt collector. The FDCPA mandates that a collector provide proof of a debt within five days of making an attempt to collect it. Five items must be mentioned by the collector in its correspondence with you:
So, after contacting you regarding the debt, the debt collector has five days to provide these five points. If you disagree with any part of the debt, you then have 30 days to send them a Debt Validation Letter. You can sue the collector for $1,000 or more if they violate the FDCPA and fail to provide these five points within five days.
Watch the following video to learn more about the Debt Validation Letter:
What should I do if I cannot pay back a payday loan?
Suppose you have financial difficulties and are unable to repay your payday loan. In that case, consider the following options:
Negotiate with the payday lender
You can try to negotiate a payment plan with the lender if you are unable to pay the entire loan amount but can raise a portion of it. Alternately, you can propose to pay a specific loan sum in exchange for the remainder of the loan being forgiven.
If you and the payday lender come to an agreement, make sure it is documented in writing for future use. Keep in mind that the payday lender is not required to agree with you and that the talks could end in failure. If so, you still have other options.
Check your state’s statute of limitations
A statute of limitations is a rule that establishes time limits for suing someone for an incident, a crime, or a debt. The lender cannot legally sue you if the statute of limitations on the debt you owe has passed because the debt is no longer collectible. The applicable statute of limitations varies by state and the type of debt involved. For instance, the term of medical debt is shorter than that of a mortgage or car loan.
File for bankruptcy
It is advised to speak with a knowledgeable bankruptcy attorney and file for bankruptcy. By declaring bankruptcy, debt collectors will stop all collection efforts, and the unsecured payday loan will no longer be valid. You can file for a chapter 7 or 13 bankruptcy. Discover more in this article about when to declare bankruptcy.
When taking out a payday loan, just like with all other types of credit, you must be aware of what you are signing up for. Before accepting any loan terms, be sure you comprehend how the loan will be repaid and how much it will ultimately cost.
Most importantly, you should never ignore a summons served on you to appear in court for an unpaid debt. Instead, reply as soon as you can. If you’re unsure where to begin, SoloSuit can help you quickly create an answer that has been approved by an attorney.
To find out more about how to react to a lawsuit for unpaid payday loans, watch the following video:
What is SoloSuit?
SoloSuit makes it easy to fight debt collectors.
SoloSuit allows you to respond to a debt lawsuit, communicate with debt collectors, and even settle debts.
The SoloSuits Answer service is a step-by-step web application that prompts you with all the inquiries required to finish your Answer. Once finished, we’ll review your document with legal counsel before filing it on your behalf.
Respond with SoloSuit
SoloSuit sent the documentation to the parties and to the court, saving me time from having to go to court, and in a few weeks the case was dismissed. “First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation, which cost extra but it was well worth it!” – James
We have answers. Join our community of over 40,000 people.
On the SoloSuit forum, you can post your queries, and the community will support you. We’re here for you whether you need assistance right away or just want support.
How to answer a summons for debt collection in your state
Heres a list of guides for other states.
Guides on how to beat every debt collector
We’re creating guides on how to defeat each debt collector if you’re being sued by one.
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Get answers to these FAQs
Read our 50-state guide if you want more information on statutes of limitations.
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Can a loan company threaten you?
Debt collectors are not allowed to harass or abuse you through calls. They are not allowed to use profanity, make threats to harm you or your property in violation of the law, make fictitious threats about what they plan to do to you, or use any other illegal threats.
What is the 11 word phrase to stop debt collectors?
Please immediately stop calling me and contacting me in any other way. The following 11 phrases will halt debt collectors in their tracks. SoloSuit can assist you in responding to a debt collector’s lawsuit and succeeding in court.
What to do if a creditor threatens you?
You can contact the Consumer Financial Protection Bureau (CFPB) online or by calling (855) 411-CFPB (2372) if you think a debt collector is harassing you. You can also contact your state’s attorney general .
What is considered harassment by a loan company?
Creditor harassment includes persistent telemarketing calls, abusive language, threats, and any other actions intended to irritate, humiliate, or harass you. It’s critical that you are aware of your rights whenever a creditor calls you because the Fair Debt Collection Practices Act (FDCPA) forbids harassing behavior on the part of creditors.