Can You Be Arrested For Defaulting on Payday Loans?

Payday loans are short term loans that are usually secured with a customer's personal check or checking account information. The check is generally held for 2-4 weeks, until the patron's next payday. When pay day arrives customers have two options: allow the funds to be debited from their checking accounts, or extend the loan by paying a fee which may vary depending on the amount of the loan.

In some instances, customers choose to default on these loans by allowing the check to be returned, stopping payment on the check, or by closing their checking accounts. On the other hand, many customers simply cannot afford to repay the debt. Regardless of the customers' intentions, if the loan is not repaid, it will become delinquent, and the customer will default payday loans.

Like any unsecured loan or credit, when customers default on cash advances, lenders are allowed to take certain actions to enforce the terms and conditions of the contract or agreement. Debt collectors may call you and write letters demanding payment, or payment arrangements. They also may send your account to a debt collection company. Conversely creditors are not allowed to make threatening or harassing phone calls or to use other scare tactics.

Depending on the state in which you live, the company can send your file to an attorney to file a civil suit. If a judgment is filed against you, your wages may be garnished, your bank accounts may be levied or a lien may be placed on your property.

However, as long as the loan was secured legally and there was no intent to defraud, creditors may not have you arrested for not repaying a loan, and they are not allowed to threaten you with jail time.

Although creditors cannot send you to prison for defaulting on a loan, consequences do exist if you payday loans by phone. In addition to having your credit marred you could possibly face legal actions such as a wage garnishment, bank levy, or property liens.

Furthermore, because you now have a history of writing bad checks, other retail establishments will not honor your checks. When you do not repay your financial obligations on time, it makes the cost of having the loan more expensive. As well as the regular fees and interest you are charged, you now have to pay late fees, collection fees, legal fees and court cost, if applicable.

Consequently, it is in the best interest of consumers to repay their debts even though they cannot be arrested because creditors can take costly legal action that will cause further financial hardship.www.phonepaydayloans.net