Under Texas law, the statute of limitations for payday loans is 4 years. This means that if you don't meet the payments, the lender has 4 years to sue you for the balance. If they don't start a lawsuit within this period, they can't sue you at all. A creditor can't put you in jail.
Lawyers may attempt to pursue you if they think you have committed a crime. However, most prosecutors understand that not paying a payday loan is not a criminal offense and will not even try to prosecute it. In fact, most payday lenders are aware that prosecutors don't have time for a payday lender to use state offices to collect their debt and interest rates and won't even contact them. They may threaten to contact them in an effort to scare you into paying.
I've even seen payday lenders lie and say they're “Investigator Jones” to frighten a debtor into paying a debt. It is not a crime not to pay a payday loan. Payday lenders routinely go to court for criminal charges when borrowers don't have the funds to repay their loans on time, according to a Texas Appleseed report. A payday lender can only garnish your wages if you have a court order resulting from a lawsuit against you.
Payday lenders cannot file criminal charges against borrowers unless fraud or other crime is clearly stated. Most payday loan companies in Texas ask their customers to fill out a post-dated check or authorize an electronic debit of a checking account for a future date. The Observer has found a justice of the peace in Harris County who has handled nearly 300 cases of hot checks, a Class C misdemeanor, for Cash Biz, an Ohio-based payday lender with 24 locations in Texas. Once you submit a loan application, your loan will be denied or put into “underwriting” and this is where the lender is trying to confirm your details, perform some final checks, and finally sign your loan for funding. So, if you have proof that a lender violated one of the many federal laws governing short-term loans, change the script and take them to court, and you may be able to get your loan forgiven.
Some courts are approving these complaints even though state laws state that bouncing a check intended to pay off a payday loan is not enough to bring criminal charges. Belinda Cinque, the hot check secretary for Justice of the Peace Tom Lawrence in the Houston suburb of Humble, said she has little choice but to accept criminal complaints from payday lenders. If a payday lender takes you to court, it is based on the assumption that you will not respond to the subpoena, forcing the court to rule in your favor. Worried he couldn't pay his bills, Tillman reluctantly turned to The Money Center, a payday loan company with offices in San Antonio and Houston. On your next payday, your account will be automatically debited for the amount you owe or you can make a payment online.
A payday lender can take you to court for default on a loan and if you violate the terms of your loan agreement. Alternatively, you can offer to repay a certain amount of the loan in exchange for forgiving the remaining amount. This could be an effective way of avoiding court proceedings and getting out of debt. It is important to remember that it is not illegal not to pay back your payday loan. However, if you do not make payments on time or violate the terms of your loan agreement, then it is possible that your lender could take legal action against you. If this happens, it is important that you seek legal advice as soon as possible so that you can understand your rights and options.