Getting a payday loan might be easy; however, this is a step that should be taken seriously. In case something goes wrong and the loan goes into default, a person is likely to deal with debt collection agencies. Their policies are very often aggressive and it makes sense to get acquainted with your legal rights beforehand. Payday loan collectors are notorious for their insistence and they are dreaded even more than International Revenue Service.
A borrower should keep in mind that all loan collectors and payday loan ones as well are subject to the FDCPA (Fair Debt Collection Practices Act.)
Section 802(e) of the latter reads, “It is the purpose of this title to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.
As long as each and every state has got different laws with regards to payday lending it should be taken into consideration that there might be some specific laws about the collection of such loans as well.
Default payday loans are not a rarity. Due to the fact that these loans are easy to get a lot of people to get into the trap of expensive lending. They appear not to be able to afford the repayment with such huge interests and this is when they have to face debt collectors.
- Before applying for a payday loan it is necessary that a borrower checked the legal status of the company.
All payday lenders are obliged to adhere to the state laws in order to be able to operate. However, there are a lot of companies that do not follow the regulations; and they are still able to make a profit on the ignorance of borrowers.
Allowed and Illegal Practices
A borrower should know that a lender is eligible to start a debt collection process with calls and letters in polite form. They, however, should not be aggressive or invasive and should be stopped as soon a borrower writes a desist notice to a lender or agency. Besides, it is also against the law when a lender keeps sending the same check for collection and gets it returned as the result of insufficient funds. As a result, a borrower gets charged huge NSF fees. This practice is definitely against the law as only one such return is allowed.
- It is also against the law when lenders try to threaten a borrower with arrest, imprisonment and a criminal trial (read how to stop debt collectors).
In the U.S. default repayment is not a criminal offense and is not the reason to put a person in jail. Payday lenders in the U.S. are authorized only to file a lawsuit (a civil one) against the borrower who failed to repay; however, no other measure in this respect.
In case the unlucky situation happened and you have to deal with debt collectors, there is no sense to quarrel. It is also better to try and reason with them and make an attempt to delay the repayment or agree on a repayment plan. In fact, in some states, an installment plan for the borrower is obligatory and required by the law and lenders have to abide by it.