What To Expect If A Payday Loan Company Is Suing You
Can I Be Sued For Not Paying A Payday Loan
One of the most common questions we receive is from consumers who may have defaulted on a payday loan in the past. Often, these consumers receive calls and letters from companies that claim to be direct payday lenders who want to sue them. These consumers are scared and confused because they are threatened with legal action and harassment. However, many of them have done nothing wrong! In a recent blog post, we explained how to find out if your past due cash advance is legitimate and how to handle the process from there.
A payday loan company can sue you and take you to court if you default.
Are you being sued or served papers by a company claiming to represent one of the large direct payday lenders? You first need to take a deep breath, step back, and find out exactly where you are in the process. The first question to ask yourself is if you’ve even taken out a cash advance or installment loan in the first place. If you have taken out a loan from a direct payday lender,
then determine whether you paid back the total amount or not. That seems trivial, but it’s essential. Unfortunately, many bill collectors and scam artists will often call on people who only inquired about taking out a payday loan in the past. They aim to scare you into paying them money for a debt you don’t even owe!
How do I know if a payday lender can sue me?
You’ll first want to know if you’re being sued or not and that starts with knowing the payday loan regulations in your state. How were you informed of a potential lawsuit regarding a past due payday loan? Did you receive a certified letter from a law firm saying they are taking you to court for a specific bad credit payday loan or cash advance? Or, did a bill collector tell you over the phone that you were “going to be sued?”
Quite often bill collectors will harass you and use scare tactics as a way to get you to make a payment for an uncollected payday loan. Indeed you want to take note of the bill collector’s threat of a lawsuit, but that’s usually where it ends. Unless you receive a certified letter from a law firm detailing the lawsuit you are not being sued.
Be sure it’s actually a direct payday loan company that’s threatening to sue you
First, confirm that you’re actually being sued by a legitimate direct payday lender. Or is the company offering tribal loans from a direct lender? Applicants in the US need to ask themselves a few important questions. Is the payday loan debt valid, and is it still within the Statute of Limitations for the state you live in? To find out if the debt is valid you need to ask yourself if you took out the loan and failed to pay it back in full. It may be that you’re a victim of identity theft or overall incompetence by the original direct payday lender.
If the debt is valid you want to check the Statute of Limitations for your specific state. Keep in mind that the Statute of Limitation time frames varies depending on your state. For example, in Delaware, you have three years, and in Indiana, you have ten years until the time expires! If the time in your respective state has lapsed the creditor cannot sue you to recoup the cash advance you took out.
Direct lenders and bill collectors have a limited amount of time to sue debtors for nonpayment of direct payday loans.
At this point, the most they can do is harass you by sending threatening letters and making phone calls until you instruct them to stop. Another thing you’ll want to do is to see if payday loans are even legal in your state. Direct lenders will often lend money to consumers without regard for the state they live in. For example, if you live in New York it is forbidden for any company to offer you a payday loan. California and Texas on the other hand have thousands of online and retail lenders spread throughout the state.
Payday Loan Companies Can Take You To Court – But They Prefer Not To
If the debt is valid and the Statute of Limitations has not lapsed, you’ll want to do all you can to prevent this from going to court. Contact the original direct payday lender and try to negotiate a settlement with them. Many companies that offer direct payday loans online will want to work with you. Short term payday lenders will do all they can to avoid a costly and lengthy court procedure. They would rather have the money upfront than have to wait years even if they have the power of a judgment to collect on the debt.
What To Do If Your Payday Lender Has Sued You
If you’re being sued by a payday loan company, it’s important to take the lawsuit seriously and respond appropriately. As we mentioned above the lender can’t send you to jail and they can’t threaten you physically. But they still have options and can make your life difficult if you do nothing or don’t know how to respond. If you’re unable to repay the loan and the lender sues you, they may be able to garnish your wages or put a lien on your property. This means that if you do have assets, the lender could potentially seize them in order to recoup their losses. Another thing the lender can do is report the debt to the credit bureaus, which would damage your credit score.
So what can you do if you’re being sued by a payday lender? First, it’s important that you show up to court and explain your side of the story. You may be able to negotiate a repayment plan or reach some other type of agreement. If you don’t show up, the judge will likely rule in favor of the lender and they’ll be able to garnish your wages or put a lien on your property. This is the most important recommendation that we want to say twice, always show up to court!
If you are facing a lawsuit from a payday loan lender, it’s important to take it seriously and respond appropriately. Taking some time to understand your options and potential outcomes can help you make the best decision on how to respond and deal with the lawsuit. First, try to work with your lender and negotiate some type of settlement or alternate payment plan in exchange for dropping the lawsuit. On the day of the court case, be sure to show up and explain your side of the story. Touch on the hardships this debt has caused you and force the lender to provide as much detail and documents as possible. If you’re still struggling after all of this, reach out to a local consumer protection agency or an attorney that specializes in debt relief for more help.
Do all you can to settle this debt before your court date. If your case ultimately goes to court you will lose. To make matters worse you’ll end up owing a lot more money. Court costs and legal fees can be added to the original amount owed when you first took out the payday loan!