29 JanPersonal Loans by Pat S 7 Comments
Can I be arrested for default on payday loan ?
Well that is a question many short term borrowers may have asked themselves at some given time or another if they happen to be repeat borrowers. in some cases the lender may have instilled that fear into the borrower’s mind to frighten them into making sure that they make their payments.
However the practice of misinforming the consumer is illegal since there is no legislation in the US that states that defaulting on payday loan payments is a criminal offense. So if you have an outstanding payday loan , don’t worry about it. You cannot be arrested and put in jail for not paying your payday loan. If a lender states that you can be arrested for defaulting on your loan, then they are the ones committing a criminal offense according to the (FDCPA) Fair Debt Practices Act .
If you find yourself dealing with an unscrupulous payday loans company that insists that you can be arrested for default on payday loan, you can have them reported to the authorities. This may even result in voiding the agreement between you and the lender resulting in annulling your debt to them altogether.
However, as much as it may be to the relief of those who have outstanding debts, there are still some serious consequences in regards to credits scores with the credit agencies. Anyone with long outstanding debts will eventually develop a negative credit history report.
This can hurt in many ways. Repeat offenders of loan defaulting can end up having their bank accounts closed, being refused for additional credit, or nowadays even having their credit cards limits reduced. In worse cases, those with bad credit are even having their credit card privileges revoked altogether.
Short term cash loans and payday loans are not something to abuse. In many ways these are very helpful to those looking to rebuild their credit. Payday loans are relatively easy to get as long as you have a bank account, can prove income and provide personal identification.
Most lenders do not do a full credit check, so this is a great way to re establish bad credit if this happens to be the case.
Remember that in these very tough economic times, credit card companies have been hard hit with personal bankruptcies on the rise all over north America putting many credit cards companies in trouble. It is now much more difficult to establish credit, as there are many credit companies revising their lending policies leaning towards much tougher stipulations for the borrower to receive any credit. It is even getting difficult for those who have good credit to apply for additional credit.
So it is vitally important to maintain good borrowing practices and repay those payday loans even if you are not going to go to jail for not paying.