What Happens If You Default On A Payday Loan?
Payday loans are high interest loans you can get if you need money before your next payday. They can be convenient in an emergency, provided you’re ready, willing and able to pay them back plus interest. But what happens if you can’t pay them back?
The first thing that can happen you probably already know about, if you were listening to the payday loan provider or if you read the agreement you signed. That is, the payday loan company will continue to debit your account until they receive their money back. Unfortunately, if you do not have the money in your account you’re going to start racking up fees quickly.
You’re going to be paying a bounced check or insufficient funds fee to your bank each time the payday loan company tries to debit money from your account. For many banks this fee runs at around $35 a hit and it adds up extremely quickly. Additionally, you may have to pay the payday loan company a fee each time they attempt to debit your account and are unsuccessful.
The second thing they’re likely to do is to garnish your wages. This means you will have to sign some paperwork (you may have already signed it when you applied for the payday loan) that gives them permission to get the money directly from your employer. This is all fine and dandy except for the fact that it can end up on your credit report, and now your paycheck is smaller than ever. Not to mention the fact that your employer is now involved in your debt and you may be paying extra fees to the payday loan company for this option.
They can also take you to court. This is expensive and embarrassing. And yes, you’ll still end up having your wages garnished (see above for repercussions), and you’ll have to take time off of work to go to court. And you’re responsible for the court cost.
And all the while, you’ll be dealing with harassing phone calls which are extremely stressful, embarrassing and frustrating. Can you be arrested for defaulting on a payday loan? No. Can they take you to court and make your life extremely uncomfortable? Yes. Can they affect your credit rating? Yes.
If you’re considering a payday loan, be 100% certain you will be able to pay it off when it comes due. Don’t consider closing your bank account or avoiding them, because they know who you are and where you are. And consider putting away a dollar a day into a rainy day fund so the next time you have a cash crunch, you don’t have to worry about payday loan companies or your ability to pay them back.
Get help with a Quick Payday Loan here.
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Tags: Default On Loan, Default Payday Loan, Pay Day Loan, Payday Loan, Payday Loans
