If you don't make cash advance payments on time, your lender may hire debt collectors to try to get you to pay your debts. You may receive mail or phone calls from collectors requesting payment, and collectors may even file a lawsuit against you. Payday loans come with exorbitant interest rates and fees that often make it very difficult to repay them. If you can't repay a payday loan, the account may be sent to a collection agency, damaging your credit. Defaulting on a payday loan can result in bank overdraft fees, collection calls, damage to your credit score, a day in court, and a garnishment of your paycheck.
There is also a possibility that the collection company will take you to court and garnish your property or wages. Payday lenders also have the option of collecting your check on the due date of the payment. If you don't have enough in your account, your check will be returned and both your bank and payday lender will charge you a fee. Even if a creditor hasn't sued you yet, if your income is exempt, you should be alert to prevent a payday lender from seizing it. If the payday lender has your checks or authorization to access your account, you don't have to sue it to get paid.
No, you can't be arrested for not paying a payday loan. However, if you are sued or a court judgment was entered against you and you ignore a court order to appear, a judge can issue an arrest warrant against you. To avoid defaulting on your loan or the risk of late payments, you can apply for another loan. If you need quick cash to get to your next paycheck, you may be thinking about applying for a payday loan. Your loan may eventually be turned over to a debt collector who will contact you to pay your loan in full.
If you are unable to maintain the payday loan cycle and fall behind on payments, you will eventually default on your loan and your credit rating could stagnate. Payday loans are also often referred to as cash advance loans, check advance loans, post-dated check loans, or deferred deposit loans. The lender will give you the loan funds in cash or by check, or directly deposit the funds into your checking account. Under Washington law, you must first repay an existing loan before you apply for another loan with that lender. While other types of loans are repaid in monthly installments, payday loans generally need to be repaid in full on the due date.
Any payday lender that causes you to pay an additional fee to “renew your payday loan” and make the entire loan mature later is violating state law. A consolidation loan is another option if you need to repay several high-interest loans or debts, such as credit cards. A person in need of immediate cash due to a personal emergency can get a “payday loan” from any of the numerous payday loan companies throughout Texas. Even if you can get a loan in the future, you could face much higher interest rates (although not as high as payday loan rates). As the name suggests, these loans are designed to provide you with a cash advance on your next paycheck. Because lenders do not report loans to credit bureaus Experian, Equifax and TransUnion, repayment of the loan will not improve your credit.
To avoid this situation, it's best to avoid payday loans unless you are sure that you can repay the loan amount right away. You can also get a home equity loan if you have a home or take out a cash advance from your credit card.
