You may have a debt, but you still have rights. And debt collectors have to obey the law. Knowing your rights and options under the law is essential if you are faced with debt collection. This article provides information on debt collection practices, relevant federal and Texas laws, fast loans, and other information that can help you understand the debt collection process.
A quick loan (also called a cash advance loan, check advance loan, later date check loan, or deferred deposit loan) is a short-term, high-interest loan from a check cashing company or financial company. The principal balance of a loan agreement authorized by this section may not include the acquisition fee, installment account management fee, default charges or deferment charges, or return check charges authorized by article 3,506, Business Commercial Code &. A purchase charge under this section is considered accrued at the time a loan is granted and is not subject to repayment. Payday loans, which are already effectively banned in 15 states, involve customers taking out small-amount loans with very high fees. Compared to other states, short-term, high-paying loans, such as Martinez's, have few restrictions in Texas, and many say they are a debt trap for middle- and low-income Texans.
A monthly maintenance fee may be charged for each month the loan is outstanding after the first 30 days of the loan. If a payday loan is not paid in full on or before the due date, the licensee may charge interest after the due date at a rate not exceeding 2.75% per month. If a loan under this section has an initial term of less than one month, the lender may charge a minimum amount of the acquisition fee and an interest charge that produces the same effective return as the installment account management fee, calculated at a daily rate for the period in which the loan is outstanding. More than 40 municipalities in Texas have passed ordinances restricting the expansion of short-term loan agencies. A loan agreement to which article 342.251 applies and which is paid in a single installment may provide for an acquisition charge and an interest charge on the cash advance that does not exceed a rate or amount that produces the same effective return, determined as an actual daily profit rate, as allowed in article 342.252, taking into account the amount and term of the loan. While Texas usury laws protect borrowers from annual interest rates greater than 10 percent, payday loan fees have no limits. About 8 percent of Texans have taken out payday loans, compared to the national average of 5.5 percent.
But he said payday lenders aren't actually lenders, but brokers or “credit access companies” that manage loans. If the licensee grants a subsequent payday loan to the customer by virtue of the sub-amount, damages, costs and disbursements to which the licensee may be entitled in connection with any civil action to collect a loan in the event of default will not exceed the amount of the loan initially contracted. In conclusion, it is important to understand your rights and options when it comes to debt collection practices in Texas. Payday loans are effectively banned in 15 states due to their high fees and lack of restrictions in Texas. While Texas usury laws protect borrowers from annual interest rates greater than 10 percent, payday loan fees have no limits.
More than 40 municipalities in Texas have passed ordinances restricting the expansion of short-term loan agencies.