BILL'S ANSWER
These small loans, often called "cash advance loans," "check advance loans," or "deferred deposit check loans," are a frequent pitfall for consumers. A fee anywhere from $15-$30 per $100 borrowed is charged for an average loan of $300. With rates so high and the term of the loan so short, there's no wonder that a very high percentage of these loans are rolled over by the borrower again and again so that the accumulated fees equal an effective annualized interest rate of 390% to 780% APR depending on the number of times the principal is rolled over.
If you default on your payday loans, the lender can take the same action as any other unsecured creditor to enforce a defaulted debt. Generally, their collection efforts will start with telephone calls and dunning letters demanding that you pay the balance of the loan. If the payday loan company refers your accounts to a collection agency, you can usually stop the telephone calls by sending a cease communication demand letter, commonly called a cease and desist notice, to the collection agency. A federal law called the Fair Debt Collections Practices Act (FDCPA) states that third party collectors must stop calling you if you notify them in writing to do so. Several states, such as California and Texas, extend many of the regulations in the FDCPA to cover original creditors as well. To find out more about debt collection laws in your state, visit the Privacy Rights Clearinghouse web site and see the page State Debt Collection Laws and Publications.
If the creditor or collection agency cannot coerce you to pay through standard collection tactics, such as threatening phone calls, the creditor may decide to file a lawsuit against you to obtain a judgment against you for the balance of the debt. If the lender sues and obtains a judgment against you, it can then take steps to enforce the judgment as allowed by your state law. The most common methods of enforcing a judgment are wage garnishment, bank account levies, and property liens. To find out what actions a creditor can take to enforce a judgment in your state, I encourage your visit the BCS Alliance site and see the page Handling Debt Collectors: Wage Garnishments.
Luckily, the majority of creditors do not sue debtors to collect debts frequently; a lawsuit is a worst case scenario, which you will probably not experience. If your lender does take such extreme measures, you should consider consulting with a qualified bankruptcy attorney to find out what legal remedies are available to you.
You may be in luck in regard to your inability to repay these loans. Eight states require lenders to set up an installment repayment plan if an account reaches the maximum number of rollovers allowed by law and the debtor declares that he/she is unable to pay the balance due. Check out the payday loan information from the Consumer Federation of America where you will be able to read all about these loans and the various state attempts to regulate them. Follow the "state information" link to find out the specific regulations for payday lenders in your state, and if you live in one of the eight states requiring installment payments. If your state does require repayment plans, and the lender still won"t accept payments, call your state regulator of payday loans, usually an assistant Attorney General, and complain. You should get the results you want after the Attorney General's office becomes involved.
If you are not in one of those states, you may want to consider simply making payments to the lender of whatever you can afford to pay down the balance of the loan over time. In most states, the rollover limit will soon be reached, and the interest rate the lender can charge will be capped by state law. If the lender will not accept your payments, simply put what you can afford aside each month until you have enough money to either pay off the loan or to offer a settlement. Read up on the regulations in your state to find the best strategy for your situation.
Bills.com also offers more information on the Payday Loan Information page, and has answered reader questions about payday loans in California, Florida, Illinois, Massachusetts, Missouri, New York, Texas, and Virginia.
If you do not repay a payday loan, the payday loan company has several legal remedies, including wage garnishment, levy, and lien. See the Bills.com resource Collections Advice to learn more about the rights of creditors and debtors.
I hope this information helps you Find. Learn & Save.
Best,
Bill
July 27, 2010
July 27, 2010
June 25, 2010
The FDCPA applies to all engaged in the collection of debt. Under the FDCPA, it is illegal to disclose the existence of a debt to a third-party. A collection agent may not "...contact anyone on your application as much as we want..." Under the FDCPA, the collection agent may contact a reference to determine if the reference knows the location of the debtor, but that is all.
Regarding closing a bank account being a misdemeanor, that is untrue. If you believe this true under Arizona law, please cite the code section or court case that sets this precedent.
Regarding bankruptcy, under the FCRA, the record of a bankruptcy must be purged from a credit report 10 years after the date of discharge. Bankruptcy does not follow a person indefinitely.
June 25, 2010
May 25, 2010
May 24, 2010
May 11, 2010
First, debtors have not been imprisoned in the US since the Civil War. Being in debt is not a criminal offense anywhere in the US. If a debtor fails to repay a debt, the only remedy creditors have is in the civil -- not criminal -- court. The remedies to debt are wage garnishment, levy, and lien. See the Bills.com resource Collection Advice to learn more about these three remedies. Second, the caller is attempting to frighten you into thinking this is a criminal matter -- it is not. See Fake Debt Collector to learn how to handle this situation. The fact that your caller hung-up on a police officer indicates clearly you are dealing with an unscrupulous person. An honest, legitimate collection agent would have no hesitation to speak with a police officer. The fact that your caller refuses to is a bright, big, waving red flag that you are dealing with a fraud. Do not pay this caller a dime.
May 11, 2010
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