A payday loan, also known as a cash advance loan, is a short-term, unsecured loan that is typically due on the borrower’s next payday. These loans are typically used to cover unexpected expenses or to bridge a gap between paychecks. Payday loans are typically offered by lenders who are not banks, such as payday loan companies, and are usually repaid with a postdated check or electronic transfer.
Difference between a Payday Loan and a Traditional Loan
Payday loans are different from traditional loans in that they usually carry higher interest rates and fees. Additionally, they do not require a credit check and can be obtained quickly, typically within a few hours. Payday loans are also typically short-term loans and must be repaid within a few weeks or months.
There are several legal options available to borrowers who are struggling to pay back a payday loan. These options include disputing the accuracy of the loan, contacting the loan company, requesting a payment plan, requesting a settlement, negotiating with debt collectors, filing a complaint, and consulting a lawyer.
Dispute the Accuracy of the Loan
If a borrower believes that their payday loan is not accurate, they can dispute the accuracy of the loan. To do this, borrowers should review their loan documentation to check for accuracy of the amount owed, the amount of interest charged, the fees charged, the terms of the loan, and the repayment schedules.
Contact the Loan Company
Borrowers should contact the loan company to explore all available options. Before contacting the loan company, borrowers should gather all of their documentation and submit a written request for assistance. They should also request a payment plan, request a settlement, and negotiate with the loan company.
Request a Payment Plan
Borrowers can request a payment plan from the loan company to reduce the amount of money they owe. To do this, borrowers should negotiate a lower interest rate, a lower payment amount, and a longer repayment period.
Request a Settlement
Borrowers can also request a settlement from the loan company to reduce the amount of money they owe. To do this, borrowers should negotiate a lower amount owed, a lower interest rate, and a longer repayment period.
Negotiate with Debt Collectors
If the loan is being collected by debt collectors, borrowers should contact them to negotiate. Before contacting the debt collectors, borrowers should gather all of their documentation and submit a written request for assistance. They should also request a payment plan, request a settlement, and negotiate a lower amount owed, a lower interest rate, and a longer repayment period.
File a Complaint
Borrowers can also file a complaint if they believe their loan was not handled properly. To do this, borrowers should contact their state Attorney General, file a complaint with the Consumer Financial Protection Bureau, or file a complaint with the Federal Trade Commission.
Consult a Lawyer
Borrowers should also consider consulting a lawyer to explore their legal options. To do this, borrowers should research loan laws in their state, consult a lawyer to explore legal options, consult a lawyer to negotiate with the loan company, and consult a lawyer to negotiate with debt collectors.
When a borrower is struggling to pay back a payday loan, they should explore all of their legal options. These options include disputing the accuracy of the loan, contacting the loan company, requesting a payment plan, requesting a settlement, negotiating with debt collectors, filing a complaint, and consulting a lawyer. It is important for borrowers to research their rights and understand the legal process before entering into any agreement with a lender.
References:
“Payday Loans.” Consumer Financial Protection Bureau, www.consumerfinance.gov/ask-cfpb/what-is-a-payday-loan-en-215/.
“Payday Loans: What You Need to Know.” Federal Trade Commission, 29 Jan. 2020, www.consumer.ftc.gov/articles/0097-payday-loans.
“Payday Loans.” National Conference of State Legislatures, www.ncsl.org/research/financial-services-and-commerce/payday-loans.aspx.
Frequently Asked Questions
What happens if you can’t pay off your payday loan?
Payday loans come with exorbitant interest rates and fees that often make them very difficult to repay. If you can’t pay back a payday loan, the account may be sent to a collection agency, which will damage your credit.
Can a payday loan be written off?
Types of Loans You Can Get Written Off Include:
Payday loans. Title loans. Secured loans. Personal loans.
Can payday loans sue you?
If you don’t repay your payday loan, the payday lender or a debt collector generally can sue you to collect the money you owe. If they win, or if you do not dispute the lawsuit or claim, the court will enter an order or judgment against you. The order or judgment will state the amount of money you owe.
Can a payday loan sue you after 7 years?
In California, the statute of limitations on most debts is four years. With some limited exceptions, creditors and debt buyers can’t sue to collect debt that is more than four years old.
Comments are closed.