We have all seen courtroom scenes on television and the drama is always entertaining. But have you imagined how would it be if you are the one in the courtroom? It won’t be that pleasant, right? It’s no “Law and Order” or “Judge Judy”, it’s real life and being in that position is no fun.
Even the lawyers want people to settle their cases out of that stressed room. For the same reason, it is important to know if something you are involved in possesses the power to put you in front of the judge.
The question that if a payday loan can land you up in court is asked by a lot of people and we are here to solve the mystery for you. But if you are struggling with the question that what payday loan is, then let’s clear basics for you.
A loan that is given to you with very short payment terms and very high annual percentage rates (APR) are called payday loans. These are a type of bad credit loan where the lender won’t check a person’s previous credits during the process of lending. This type of loans is also called “no credit check loans” or “cash advance loans”. They are available at both storefront loans and online loans.
With the help of APR, you can make out the total cost of the loan over one year. It helps you in comparing it with all other kinds of loans, so the lower the APR, the better it is for you. The APR on a payday loan can go as high as it can. It may vary from 300% to 400% and in some cases, it may be greater than this.
So, if the rates are that high, why would one want to get such a loan? It’s mainly because of an emergency situation or if you have a bad credit score. In the latter case, you won’t be allowed to get a traditional personal loan. In any case, it’s a risky state to be in as it is nothing but a dangerous cycle of debt.
This risky cycle can lead you to court but not very often. It depends on how the debt cycle unfolds and on the frequency of paying your payments. If you haven’t paid off your payday loan, and that’s all you have done then it’s unlikely that you will end up in court.
If they have dragged you to this stage then they are expecting and hoping that you won’t show up. A Board Certified Consumer Bankruptcy Attorney, Damon Duncan said, “I periodically see folks being sued for failure to pay these payday loans. It is, however, uncommon. After late payments, the payday loan company would likely sue the debtor in an area where the debtor has real property and, if they don’t have real property, a location convenient for the creditor. Most debtors will fail to respond to a lawsuit so a default judgment would be entered against them.
Once the creditor has a judgment they can attach liens to property like houses, cars, bank accounts, etc. Liens in North Carolina last for 10 years and can then be renewed for an additional 10 year period. Other states are very similar.”
If you have seized paying payday loan don’t assume that the problem will just go by. It’s not just the payday loan firm that you need to worry about, the debt collector company and the law firm will be playing its role actively. Katie Ross, Education and Development Manager at American Consumer Credit Counseling gave her word on how to manage the threat of lawsuits. She said, “When you miss a payment, the lender will try to contact you via the contact information you provided i.e. address, phone, email. If you ignore the lender and don’t make any payments, they will turn to a third-party collections agency to try to get the debt back. This can happen even after thirty days of a missed payment.” Consequences will be more aggressive from that side.
Know that it is a two-way street, so if the payday loan firm has made a mistake in judgment then even you can drag them to court. Yes, they might have more resources than you have but you should still know your options.