What Happens If You Don't Pay Back a Payday Advance Loan?
Payday loans or advance loans are typically small loans that come with high interest rates. According to Bills.com, in most cases a postdated check is written to the lender and held until the loan is due. Upon the loan's due date, the check is cashed; in some cases, though, the person requesting the loan is unable to repay it.
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Effects
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Payday lenders are able to request payment for unpaid loans, as a completed loan agreement is legal documentation that you have agreed to repay the loan. According to Bills.com, the lender may call you at home or work and send letters to you demanding that you pay or have a collection agency call and demand payment.
Significance
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If the loan continues to go unpaid, the lender is able to sue you for the debt owed. Depending on the state where you live and where the loan was issued, the court may issue a lien on your property or vehicle, levy your bank account or garnish your wages until the debt is cleared.
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Considerations
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Bounced payday loan checks often result in fees for insufficient funds in your bank account. If too many of these fees are drawn, the bank may close your account, making it difficult to open a new checking account, according to Bills.com. In addition, the loan lender may be able to take action in civil court against you for passing a bad check.
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