Defaulting on a payday loan can have serious consequences, including bank overdraft fees, collection calls, damage to your credit score, a day in court, and even wage garnishment. Payday loans come with exorbitant interest rates and fees that make it difficult to pay them back. If you can't repay the loan, it may be sent to a collection agency, which will damage your credit. The payday lender may also have your check or authorization to access your account. If you don't have enough money in your account when the payment is due, your check will be returned and you'll be charged a fee by both the bank and the payday lender.
Even if you haven't been sued yet, you should be aware of the possibility of a payday lender seizing your income if it's exempt. You don't need to sue the lender to get paid if they have your check or access to your account. There is a chance that the collection company will take you to court, which could result in garnishments against your property or wages. No, you cannot be arrested for not paying a payday loan. However, if you are sued or ignore a court order to appear, a judge may issue an arrest warrant. Many borrowers cannot repay the loan in one lump sum, so they renew or reborrow the loan.
This increases the interest rate and makes it even harder to pay off the debt. Federal law limits the APR that payday lenders can charge military families on payday, anticipation of tax refund and title loans to 36%.Payday loans must usually be repaid in full on the due date. A debt consolidation loan can help break free from the payday loan extension cycle by switching debt for debt. If you don't have enough money when it's time to pay back the loan, tell your lender that you need an installment plan (a payment plan).
Each time a payment is returned due to insufficient funds, both your bank and payday lender will charge a fee. If you are automatically deducting payday loan money from your bank account, ask the bank to stop this deduction. Under Washington law, you must first repay an existing loan before applying for another one with that lender. Getting out of debt is possible with a personal loan. You can use it to pay off your high-interest payday loan and then repay the personal loan according to a schedule that works for you. No matter what happens, defaulting on a payday loan can bring stress and uncertainty about the future. It's important to remember that there are options available for getting out of debt.