Is A Payday Loan Company Suing You? Here’s What Happens Next.
A payday loan shouldn’t result in a lawsuit. Protect yourself if a lender sues you.
One of the most common questions we receive is from consumers who may have defaulted on a payday loan in their past. Oftentimes these consumers receive calls and letters from companies that claim to be direct payday lenders. These consumers are scared and confused because they’re being 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 in the right situation.
Are you being sued or served papers by a company claiming to represent one of the large direct payday lenders? The first thing you need to do is 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 full amount or not. That seems trivial, but it’s important. Many bill collectors and scam artists will often call on people who only inquired about taking out a payday loan in the past. Their goal is to scare you into paying them money for a debt you don’t even owe!
You’ll first want to know if you’re being sued or not and that’s 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 lender that’s threatening to sue you.
First, confirm that you’re actually being sued by a legitimate direct payday 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 payday 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 you 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.
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. 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!