Can You Go to Jail For Unpaid Payday Loans?
Posted on December 20, 2022 in Debt
The short answer is that you cannot be arrested for failing to pay back a payday loan. This means that you can’t go to jail for unpaid payday loans; however, if you are sued or a court judgment is entered against you and you fail to appear in court, a judge may issue a warrant for your arrest. A court order should never be disregarded, as it can lead to jail time in the worst case scenario.
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Payday loans often lead to debt traps because of their high-interest rates. Research shows that over 80% of payday loan debtors end up rolling over their loans. What starts as a cash relief results in a vicious cycle of compounding interest rates!
Eventually, it leads to loan default, which puts you into bad books with the lender. In a bid to recover bad loans, lenders threaten defaulters in various ways. Often, they will threaten you with jail or to sue you.
But can a payday loan take you to court? And can you go to jail for not paying a payday loan? In this article, we’ll discuss the legitimacy of payday loan summons and whether they can lead to you serving some jail time.
Can You Go To Jail For Not Paying Online Loans?
Most people who find themselves in the trap of unpaid payday loans ask, “can I go to jail for not paying online loans?” Well, the federal body that regulates online lending, the Consumer Financial Protection Bureau (CFPB), clearly states that you cannot go to jail for falling short on your repayment of online loans.
However, CNBC revealed that more than 3,000 payday debtors in Utah did jail time due to defaulting on their loans in 2017 and 2018. You might be asking how this is possible since federal laws clearly state that you can’t go to jail over unpaid loans.
The technical aspect is that they didn’t go to jail for not paying online loans, but because they ignored court orders regarding their unpaid debt. In the eyes of the court, it shows that you’re unwilling to find a lasting solution to your problem of not paying online loans. As a result, you’ll be in contempt of the court and face jail time until you post bail or pay part of the loan.
It’s advisable not to ignore any court summons to avoid jail time. Since these hearings can take quite some time, be sure to talk to your attorney to represent you if you don’t have the time to attend.
Are Payday Loan Court Summons Legitimate?
Yes, payday loans court summons are legitimate. They’re a result of defaulting on your payday loan. By so doing, debt collectors opt to sue you to cover the loan, usually 60 days after your initial payday loan advancement. Once you receive a court summons, honor them and attend all court proceedings to avoid jail time for not paying your payday loan.
However, not all payday loan settlements qualify for legitimacy. They have to meet the statute of limitations on debts. The statute of limitations on debt limits the time a creditor has to sue you over unpaid payday loans. When this time limit expires, your due payday loan becomes time-barred. The limitations vary from state to state.
Even if your debt clocks out, you still owe money to your debt collector. The good thing is that the negative credit remarks will be invalid to your credit history depending on the statute of limitations of your state. The debt collector will continue to pursue you for the money, and if you make (or promise to make) any payments, you’ll reset the clock, and you might find yourself in court.
It would be best to talk to your attorney or a trusted debt relief agency about clearing your debt without hurting your credit score once an unpaid payday loan becomes time-barred.
Is Not Paying A Payday Loan A Felony?
To make you repay your payday loan, payday lenders can cause all manner of threats. One of the threats is that you’re committing a felony by not paying your payday loan.
It isn’t true that you’re committing a felony by not paying your payday loan unless the debt arises out of the criminal justice system.
For it to qualify as a felony, your creditor must prove that you’ve committed fraud. It demonstrates that you took the loan without the intention of paying it back and knew that your checking account would be empty a week after the pre-determined collection date.
You should be conversant with the terms and conditions of your payday loan to gauge if you can repay the total amount of the loan. Always look out for high fixed interest rates to calculate the amount you will pay back.
Can A Payday Loan Issue A Warrant?
No, jail is not a legal punishment for debt default. Payday loans cannot issue an arrest warrant, but they can take you to court when you default on your payments. During court proceedings, the debt collector can plead with the court to issue an arrest warrant when you fail to honor the court’s orders sighting contempt of court orders. But not because of your unpaid payday loan.
You shouldn’t ignore any court order to avoid an arrest warrant, as this can lead to jail as a result of unpaid payday loans.
Can Check N Go File Criminal Charges?
Do you wonder what will happen if you default on your loan? Your loan details will be forwarded or sold to a credit reporting company. Check N Go is one of those credit reporting companies.
They are responsible for following up on you to pay the loan and report your credit. As such, they can’t file criminal charges for defaulting on your loan. This is because loan defaulting isn’t a criminal but a civil offense. It qualifies as a civil offense since it is a disagreement between two parties.
Therefore, they can only take you to a civil court as it’s evident that you haven’t committed any criminal activities to qualify for a criminal court.
Dealing With Debt Collectors
Debt collectors can threaten to file criminal charges against you. It is an attempt to scare you into paying back the payday loan. The CFPB offers transparent, Fair Debt Collection Practices that Check N Go must use in collecting and reporting your debt. They include;
- Must provide a Debt Collection Validation Notice
- They should not call you more than 7 days a week or within 7 days after calling you about a particular debt.
- They must wait 14 days after sending a notice before they report your debt to a credit reporting company.
- Can only communicate by phone, mail, or use other electronic communication.
- They should leave a voicemail that qualifies as a limited content message.
If you find a debt collector crossing any of these regulations, you should file a complaint with the CFPB. Consider sitting down with your debt collector to work out a solution before it reaches credit reporting companies like Check N Go that might influence your credit report negatively. Also, notify your state attorney so you’ll be in a consensus.
Conclusion on Jail and Unpaid Payday Loans
You can’t go to jail for not paying your payday loan, but you can be jailed for not honoring the court’s orders. Always adhere to these orders even if a lawsuit has been filed mistakenly against you. Turn up to avoid possible jail time.
Remember, the best option to avoid jailing is not allowing the collection process to get to court. It saves you a lot of time and resources. So, sit down with your debt collector and agree on the best repayment plan. In the long run, this will save you the headache of added payday loan debt, or having to resort to an option like having to file for bankruptcy.
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