Payday loans are a savior for those in a fix, financially. However, they have also landed many in trouble, including jail cells. With the high availability of instant payday loans online, many borrowers take little time to consider what happens if they cannot repay the money. Which begs the question, what happens if you cannot repay your payday loan? Can the lender take you to court, have your wages garnished or have you thrown behind bars? Let’s find out:
Can Payday Loan Companies Take Me to Court?
Yes, a payday loan company can take you to court if you fail to repay the loan. Whether you are dealing with traditional or online payday loan lenders, you should repay all your debt as per the signed offer letter.
Once you default on the payday loan, the lender has the right to take you to court in a bid to recover their money. Since most payday loans are smaller than other types of loans, payday loan companies will use the small-claims courts.
If the lender files a claim against you, the court will sermon you. The sermon will indicate who and what the complaint is. After receiving the sermon, you must reply by denying, acknowledging, or saying you do not know about the issue. Failure to respond and follow the proceeding will result in a default judgment in favor of the lender.
Can Payday Loan Companies Garnish My Wages?
Wage garnishing happens when an employer legally holds a part of your pay to repay your debts. When this happens, you will not receive your payment in full. Instead, your employer will retain a specific amount as guided by the garnishment order.
The good news is, your employer can only garnish your pay if they receive the garnishment order. Also, payday loan companies cannot call for garnishment of your wages unless they have a court order or judgment against you.
To avoid wage garnishment, it is prudent that you repay your payday loans on time. If you can’t pay as agreed, talk to the lender and work out a repayment plan.
Can Unpaid Payday Loans Land Me in Jail?
The answer is both yes and no. and, it is not what you think it is.
Let’s see; you apply for payday advance loans with a particular lender. When the loan matures, you fail to repay or inform the lender of any changes in your situation. So, the lender takes you to court, and you are sermoned. However, you fail to respond to the sermon or show up on the day of the court hearing. So, what happens?
In most cases, payday loan lenders use your non-appearance in court to obtain an arrest warrant. However, the warrant is not because you failed to pay the debt. No. in fact, the Consumer Financial Protection Bureau protects you against such. Failure to repay a debt is not treated as a felony.
But, failing to appear in court will get you in bigger trouble. The payday lender will take this opportunity to get a warrant for “contempt of court.” This could land you in jail, and you can only be released if you pay the bail money or promise to pay the payday loan.
The bottom line is that paying your payday loan is the only way you can live peacefully. A payday loan lender can take you to court for failing to pay. They can have your wages garnished if the court rules in their favor. Worse, you could end p behind bars if you ignore court sermons when a lender files a lawsuit against you. On the other hand, once you meet your obligations, you don’t have to look over your shoulder, wondering whether there is a debt collector after you.