What happens if you do not pay back a payday loan?
While every situation will be different, however, there are common consequences if you fail to repay your PaydayChampion Houston location in the time frame.
Bank withdrawals from your account
The majority of lenders attempt to take the money from your bank account according to the terms of your loan agreement. If the transaction is rejected by your bank because of a lack of money, then the bank can make withdrawals with lesser sums.
Even if the lender is able to collect some of the outstanding balance by such a method, you may be in financial trouble in the event that other transactions with banks are rejected. In addition, bank charges can add up and cost hundreds of dollars over an extremely short time.
Collection agencies getting involved
It is possible for the lender to begin actions to collect your debt, such as numerous calls and letters demanding payments, as well as continuously trying to draw your account. The lender might also decide to offer your loan to a collection company or employ counsel to help collect the money due.
You could be able to stop collection actions by asking for an extension with the lender. Some state laws require payday lenders to offer extended repayment plans to borrowers when they request. Be aware that these extensions typically come with additional charges and interest.
Credit score dropping
The lender can report the account to credit bureaus after it’s been turned over to an agency for collection. Your credit score could be affected and the mark remains in the credit report for up to seven years. This means that you might be unable to get favorable financing deals in the near future.
It’s possible to take a step to begin building the credit rating following a default on the payday loan. In the beginning, examine the contents of your credit report to identify any other accounts that are past due and make sure they are current because your payment history is the most important element to your score. Also, you should look for any errors and challenge these promptly.
Additionally, you should adjust your spending habits in order to free up money which you can then use to pay down your credit card debt within the next few months. This is a good idea to decrease the credit utilization ratio which is the total amount of credit that you are using since it is responsible for 30 percent of your credit score.
The most important thing is to keep an eye on your credit report and practice prudent debt management practices as time passes to ensure your credit score has the best chance of strengthening over time.
The lender can negotiate with you
It’s much less expensive than the bank collecting the debt than to take you to the court of law. However, selling the remaining balance to a debt collection agency for pennies per dollar implies that the lender will receive a tiny portion of the amount owed.
These two scenarios can give you the leverage you need to negotiate the payday loan debt just a portion of the balance. Provide an amount that you are able to pay in one lump sum and state your intention to apply for bankruptcy in the event that the lender isn’t willing to negotiate. The lender might agree to a compromise with you because bankruptcy could mean they won’t have the opportunity to recover.
Lawsuit filed by the lender
If the lender is able to take you to court it is their responsibility to prove that you owe them money. lies on them to show that you are in amount. Just ask them to provide documents or the agreement you signed at the time you took off the loan. When the creditor is unable to supply this information The judge may reject the claim. If the lender can prove that you owe money and gets an order from the court, then you may be required to pay or get your wages slashed.
A quick note If the lender threatens to put you in jail, contact the state attorney general’s office immediately to file a complaint.