What Are My Legal Rights Against Pay Day Loans?
Pay day loans are intended for emergency situations. Most people qualify for pay day loans because companies usually do not perform a credit check. Like any loan, there are regulations as to how a company may collect on this and the consumer's responsibility to pay the loan back.
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Pay Day Company Rights
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The company that issues the loan has the right to pursue repayment through either a debt collection agency or a lawsuit, usually through small claims court.
Consumer Rights
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Like with any other debt, debt collection companies may not harass you by calling friends and family or places of business as demanded by the Fair Debt Collection Practices Act. The pay day loan company itself may make calls for repayment, except in certain states, such as California and New York.
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Misconceptions
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Many pay day loans companies demand a post-dated check as collateral. If your bank account has insufficient funds you are not committing check fraud, despite what the loan company may say.
Effects
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If the pay day loan company obtains a judgment on a defaulted loan, they may be able to get the courts to put a garnishment on your wages or put liens on your house.
Prevention/Solution
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The Federal Trade Commission urges consumers to consider all options before taking a pay day loan. Even credit card cash advances usually have a lower interest rate.
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References
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