subject: What Happens If I Default on My Payday Loan? [print this page] What Happens If I Default on My Payday Loan?
Most people don't intend to default on their loans and knowing what could happen should they do so is often enough to keep them from doing so. The following things will most likely occur, depending on what state you live in, if you default on your payday loan.
Multiple Debits
The payday loan company you used most likely informed you before you received the loan that if you defaulted they would continue debiting your account until they recovered the money owed. The problem with this is that even if you do not have money in your account your bank is likely to charge you a $35 fee for each debit made when no funds are in your account. When you add this up not only will you owe the payday loan company the money for the defaulted loan but you will also owe your bank money. This can have serious effects on your credit and ability to open another bank account.
Worthless Check
Some states have laws regarding worthless checks, which is what would be involved if you renege on your obligation to repay your payday loan. In some states it is even possible for triple damage to be assessed. Criminal charges may be pressed in some cases, too.
Garnishment of Wages
Not all payday loan lenders require this, but many do. It's called an "Assignment of Salary and Wages."
This simply gives the lender the right to file some paperwork and have your employer attach your wages until what you owe is repaid. In this case your employer is bound by law to pay the balance or be responsible for the debt.
Court
Depending on the amount you owe, some payday lenders may take you to court. Don't think they won't simply because the lawyer will cost too much. That's because you will be responsible for their court costs! The payday lender may get a judgment against you and this could follow you for a long time!
Phone Calls
Last but not least, if you don't repay your cash advance loan you will receive phone calls quite regularly to pressure you to pay up. This is annoying and can be quite embarrassing, too.
These are just some of the things that could happen to you should you default on your payday loan. As you can see, repaying the loan that could range from $100 to $1200 will be considerably more affordable and much less of a headache in the long run. So just pay what you owe!
For more information on payday loans and questions such as "should I get a payday loan?" visithttp://www.paydayloansfor.me
