If you can't pay them within this time frame, they're likely to turn to an outside debt collection agency. The collector can then report the collection account to the credit bureaus. The collection account will appear in the public records section of your credit report. This account can only remain on your credit report for a certain amount of time, seven years from the date the original account became delinquent.
Contact your state attorney general's office if you've been threatened with arrest for not paying back a loan.
Loans expire within 14 days or when you receive your next paycheck, which is why they are commonly referred to as payday loans.The cost of payday loans is much higher than other forms of lending, but the comparison isn't obvious because lenders don't announce their annual percentage rates. According to the National Consumer Law Center (NCLC), a borrower who fails to make payments may be a more profitable customer than one who prepays the entire loan. Payday loans are short-term, high-cost loans that borrowers can use to cover expenses that arise when funds are scarce and payday isn't too far away.
Debt collectors will use several tactics to apply for the loan, such as contacting your employer, family members, or anyone listed as a reference on the loan.
Any negative balance in a checking account can also be transferred to an independent collection agency, which would result in two different collection accounts as a result of a single default on a payday loan.Most lenders try to repeatedly withdraw funds from your bank account, as allowed under the terms of the loan agreement. These are usually nonprofit companies that can offer pre-bankruptcy counseling, housing advice, student loan advice, and credit counseling. If your loan agreement gives them access to your bank account, the lender may try to make successive withdrawals, and if you are low on funds, this could result in several overdraft fees.
Just ask them to provide you with the documentation or agreement that you signed when you applied for the loan. Short-term lenders may use loopholes or poorly drafted laws to file criminal lawsuits against borrowers. Initially, short-term lenders will try to collect overdue debt before seeking help from a debt collector. Failing to pay a quick loan can result in overdraft fees, incessant collection calls, and expensive court appearances.
According to another study, 50% of payday loan borrowers stop paying a payday loan within two years of the date they applied for the first loan. If you default on a payday loan, your debt will likely be transferred to collection, which can remain on your credit report for up to seven years, and you could be sued until the statute of limitations for your unpaid debt ends.