Can A Payday Loan Company File a Judgment Against You?

Have you ever neglected to pay off a payday loan? The consequences can be extremely costly. It’s easy to get caught up in the payday loan cycle, once you have trouble paying back one loan, it will only make paying back future loans more difficult. Eventually all the loans will add up and their high interest rate will make paying them back tremendously difficult. Generally, you’ll pay $15 in interest for every $100 you borrow. Two $500 payday loans would carry $150 in interest, not to mention late fees and insufficient funds fees. That’s almost impossible to pay off and this is the point when most people have no choice but to default on their payday loan. If you default on your payday loan, your lender can take the same action against you as any other unsecured creditor. Their efforts will usually start quickly by trying to reach you by phone, email, letter, and any other means they have. Your payday loan company may refer you to a collections agency, who will work even harder to get a hold of you. Depending on how large of a debt you have, the payday loan lender could decide to file a law suit against you. If the company is able to get a judgment against, you could be forced to pay back the money through bank account levies, wage garnishment, or property liens. Keep in mind that each state has different laws regarding this and several has laws that even force payday loan companies to set up installment payment plans with their clients. So while it’s true that a payday loan company can file a judgment against you, it really should never come to that point.

How You Can Avoid a Judgment

If you think you’re in danger of getting a judgment filed against you, you should do everything you can to avoid it. The easiest way to do this is to simply get in contact with your payday loan lender before you ever even default on your loan. By talking to your payday loan company first, you can more than likely work out some sort of arrangement with them before they even send the debt to a collections agency. At some point, your lender will give up trying to make money off you and will just want their money back. Most people are able to work out a payment plan where they pay the loan back in installments, but even if the lender is unwilling to negotiate a plan, they will at least know that you’re making every effort to pay the loan back and will be less likely to file a judgment against you.

Additional Resources:

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