How many times have you found yourself short of funds before the end of the month? You still have bills that need to be paid, you have unexpected car or home repairs that need to be done, an unexpected emergency has risen, or you’ve found yourself in an unsettling situation where you need extra funds right away. It has happened to the best of us, where some of us have better resources for getting the extra cash we need such as a stashed away savings, a sizeable savings account that’s been growing like crazy, or we have a great support circle among family and friends. Whereas others are not as lucky and have to scrape and scrounge to find the extra money they need to take care of those unexpected situations that may arise. Photo from EHow.com.
Payday loans are just that one available and alternative resource to applying for bank loans where good credit is a major factor. At the time payday loans may seem like a good idea, however, you have to first ask yourself if this is a short-term or long-term need. I say that because constant use of a payday loan, if not managed properly and responsibly can create havoc in one’s life it gotten out of hand. What do I mean? In the state of California, the use of payday loans is limited as to how many you can have outstanding at one time. A manager at one payday loan store told me that “you really are not supposed to have more than five outstanding payday loans at one time.” They first look at your ability to pay them back on time and without problems going forward. But here’s the thing, some payday loan sources, especially those strictly online, do not care how many you have outstanding as long as you have an incoming source of income, a checking account, can vouch for how much you make per month after taxes, if you have direct deposit, and access to your account to pull the money out automatically.
The bottom line is they are a good idea at the time, and you may find that you need more than one to cover certain expenses, but keep in mind that if you miss one payment some will work with you as long as you are willing to pay the fees that go along with missing that one payment, or defaulting on the account — then payment arrangements can be made. Some offer refinancing on the loan allowing you to retake the loan out mid way through paying it back just to avoid you defaulting on the loan altogether (not many of those are available). But if you default on a payday loan altogether, have no payment arrangements in place, have had no communication with the loan company, then it can turn into a nightmare, so be prepared to go a full 12 rounds. Photo from MoneyNation.com
These companies will continue trying to pull the money out of your account on defaulted payday loans until they get it. This can result in an enormous amount of bank fees on — the deadly insufficient fee charges in access of $32 per returned ACH item, thus putting your account in jeopardy. And if you have other items outstanding to be paid out of your account, and that payday loan fee comes out before your other expenses, imagine the hell you will have to go through getting those expenses covered, and possible get hit with a $32 returned item fee. Who wants to go through that nonsense?
If they are still unsuccessful in getting their money back, you can expect to be haunted by the nightmarish collection calls that will go on for days and nights for several months. You can try to wait it out until the statutes of limitations run out, but be prepared for the 15-30+ calls a day from some of these companies that become ruthless in chasing you down.
Can defaulting on payday loans ruin your credit? You shouldn’t even have to ask that question! They are attached to your social security number, therefore, they will show up on your credit report because they are considered a source of credit that was extended to you with the extreme promise to pay back in full. Some local payday loans with well established collection practices in place will have you served and taken to small claims court in order to get their money back, often leading in judgements against you if you still can’t pay and don’t show up to court. You can spend years fighting payday loan companies until you actually find a reasonable way to pay them back via realistic monthly payment terms. But once an item has aged well beyond five years, ideally they cannot sue you due to the age of the debt, but they will try to collect on it even if it’s ten years later.
Unscrupulous collection agencies will contact you to collect on these accounts. This is because they have bought your account for pennies on the dollar, jacked up the amount from what you originally owe, and will use every tactic known to get you to pay them. Even scare tactics.
You have to make sure collection agencies call you are who they say they are and make sure they are legitimately representing the payday loan service where you originally took out the loan. There are horror stories of how fake collection agencies are collecting on these accounts and running off with the money and the original payday loan company never received the money. If this happens to you makes sure you have retained all of your receipts to show proof of who you paid the money to and how much was paid, and who you spoke to during the time the money was being paid. It is likely that the payday loan company may cancel the debt altogether and render it paid in full because of this particular scenario, just have excellent records available to provide if asked for it. Photo from YouTube.com.
Here are some important tips to keep in mind if you are contacted by a collection agency to collect on a payday loan debt:
- Collection agencies have to identify themselves as a reputable collection agency attempting to collect a debt and any information they obtain will be used for the purpose of collecting the debt
- Collection agencies have to disclose the creditor they are presenting including verifying the legitimacy of the debt, including the amount, the name of the creditor, and all information pertaining to that particular debt.
- If you are not sure, or you are leery of who you are speaking with, ask for verification of the debt in writing before agreeing to make a payment or any payment plan. You want to make sure the debt is indeed yours and is from the company you owe.
- If you receive something in writing with regards to the debt and the amount is different than what you originally owe, contact the original creditor to verify the amount. Get the name of who you spoke to and the date and time.
- Beware of collection agencies asking you to pay a past due payday loan via Western Union or MoneyGram, and refuse to use this option.
- Always pay though a cashier check or money order or through a debit Visa or MasterCard separate from your personal checking and savings account, and major credit cards if you are making payments.
- If the statutes of limitations has run out on the debt, and you are contacted by a collection agency, and the debt is well aged over 5 – 10 years, keep in mind that they cannot sue you (check with the statutes of limitations in your state on credit accounts). If you are not in the position to pay the debt back, do not discuss any payment arrangements or plans to pay the account in full — especially if you do not have the funds to do so. Research has indicated that this restarts the collection process and you are stuck all over again with receiving the unwanted collection calls. But check to be sure. There is a lot of different information pertaining to the rules of statutes of limitations.
- You can ask in writing by sending a certified letter to the company to stop calling you at work and at home. If this continues after the certified letter has been sent and received, you have rights against collection agencies — they are breaking the law if they continue, and you are within your legal rights to take action.
- Report harassment calls to your State District Attorney office. You will be able to file a claim. Be sure to log all dates and times, and what was said in all calls and voicemails. If you do owe the debt, harassment calls with a threatening tone are prohibited. They are not allowed to threaten you with jail, and they are not allowed to represent themselves as legal entities when they indeed are not.
- Never offer up vital information when speaking with collection agencies. If they cannot comply with your request to provide proof of the debt over the phone or preferably in writing, discontinue conversations with them until they are willing to do so. Identify theft is still high on the rise and some collection agencies are cover up for elaborate criminal activity resulting in stealing people’s money.
- Again, it is against the law for collection agencies to represent themselves as legal entities such as law firms when they are clearly not. There are laws governing this type of action in collection agencies.
- Again, it is against the law for collection agencies to threaten you with being arrested at your home or place of business, and threaten the safety of your family. Lawyers are waiting in the corner to file charges against these agencies who clearly break the law.
- More importantly, protect yourself and know your rights as a debtor.
Many of us have fallen on hard times and many of us are still feeling the after effects of the crash of the economy — still fighting to get back on our feet — getting back into the workforce, securing a means of living to stay afloat, keeping a roof our heads. Times are still tough for many, while some have it a lot better and have not had to experience the struggles that most experience.
Outstanding credit accounts of all kinds are just that…outstanding, and will have fallen into the hands of collection agencies — some more legitimate than others. How they come at you speaks volumes — collection letters prepared with professionalism providing you adequate information that verifies the validity of the debt, whereas some will come with sketchy information you have to think twice about.
Educate yourself on what collection agencies can and cannot do and know who to report them to when they knowingly break the law.
If you can avoid having to go this route in getting payday loans, then by all means do whatever you can in getting involved with this market. The nightmare will never go away unless you file bankruptcy and file on all those payday loans you have outstanding. If they call you after you have file for bankruptcy and it’s been charged off then you can forward them copies of the documentation stating you filed for bankruptcy and move on from there; don’t get into conversations with them because you may say something you may ultimately regret — just don’t make the same mistake twice. Photo from Paydayloanopinion.com.
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