Can You Go to Jail for a Payday Loan?

George Simons

November 03, 2021

Summary: Are you being sued for a payday loan? Is the lender threatening you with jailtime? Find out if you can go to jail for a payday loan.

Did you know about 12 million Americans use payday loans annually? This comes as no surprise, given that payday loans help fulfill the financial needs of many working Americans who can't access traditional loans.

Payday loans may seem convenient and offer a short-term solution when you need immediate cash to cover an emergency. However, these loans attract high-interest rates and fees. This is the most common reason most people default on payday loans.

If you've defaulted on your payday loan, you might be concerned about the consequences of doing so. Some people might even be worried about the possibility of going to jail for not paying their payday loans.

According to CNBC, there have been reports of individuals getting arrested for falling behind on their payday loans. However, this shouldn't be a cause for alarm because, legally, debtors can't be jailed for not paying a debt. In some states, it's even illegal for a creditor to threaten a borrower with jail.

Don't let debt collectors threaten you with jailtime. Respond with SoloSuit.

How to deal with debt collectors

Most of the time, when you default on a payday loan, debt collectors begin calling you day and night. Some even threaten to have you arrested. This can be quite stressful, especially if you want to pay the debt but can't due to financial hardship.

But there's no reason to worry; the Fair Debt Collection Practices Act protects you by prohibiting debt collectors from harassing you, issuing threats, or calling you after 9 p.m. If a debt collector constantly harasses you and threatens to have you arrested, you can take the following actions:

File a complaint with your state's attorney general. To find out who your state's attorney general is, click on this site and select your state. File a formal complaint with your state's consumer protection office. To find your state's consumer protection office contacts, click on this site and select your state.

Submit a formal complaint to the Consumer Financial Protection Bureau (CFPB). You can do this by submitting your complaint on their official website or by calling 855-411-2372.

Can a payday lender sue you?

Many individuals who've defaulted on their payday loans are particularly terrified of a lawsuit. Understandably, the courtroom is the last place they want to be for defaulting on a loan.

Payday lenders are good at making all sorts of threats, but can they sue you? Well, the answer to this is yes. A payday lender can take you to court for defaulting on a loan and if you violate the terms of your loan agreement.

However, they can only take you to a civil court and not a criminal court. So most of the time, a payday lender would threaten to sue, but they actually can't do so. Here's why.

First of all, going to court is expensive considering the legal fees involved. Secondly, most lenders would prefer to negotiate with you and come up with an out-of-court agreement rather than take you to court. If a payday lender takes you to court, they're banking on the assumption that you won't respond to the court summons, forcing the court to rule in their favor. In such a case, the judge may order a wage garnishment.

Protect your wages from garnishment by responding with SoloSuit.

To prevent this from happening, you can use SoloSuit to file an attorney-approved answer. This software automatically generates an answer document for you based on the information you provide. An attorney from SoloSuit then reviews the answer, ensuring it meets all the requirements for your case, and then sends a copy to the court and the plaintiff.

However, there are instances where you can get arrested. For example, the creditor could obtain a warrant of arrest against you for failing to appear in court. Note that you'll be arrested for contempt of court and not because of having an unpaid payday loan.

To avoid this, use SoloSuit to respond if served with a court order for defaulting on a loan. After filing a response to the court, you'll be informed of what you need to do next. Most of the time, you'll be given a court date on when to appear for trial. Alternatively, the court may recommend that you first try to settle the case with the petitioner out of court. Either way, it's always advisable to participate in the entire process to avoid a default judgment against you.

What should I do if I'm unable to pay back a payday loan?

Suppose you're unable to pay your payday loan due to financial constraints. In that case, consider the following options:

Negotiate With the Payday Lender

If you're unable to pay the whole loan amount but can raise part of it, you can try to negotiate a payment plan with the lender. Alternatively, you can offer to pay a certain loan amount in exchange for forgiving the remaining amount.

If you reach an agreement with the payday lender, ensure it's in writing for future reference if need be. Note that the payday lender isn't obliged to agree with you, and the negotiations might fail. If so, you still have options.

Check your state's statute of limitation

Statute of limitations is a law limiting when you can be sued for a certain event or crime. If the statute of limitation has expired, that means the debt becomes uncollectible, and the lender can't legally sue you for the debt.

Make the right defense the right way with SoloSuit.

File for bankruptcy

It's advisable to contact an experienced bankruptcy lawyer and file for bankruptcy. Filing for bankruptcy will halt all collection efforts by debt collectors and render the unsecured payday loan void.

As with all forms of credit, you need to know what you're getting yourself into when taking a payday loan. Ensure you understand how the loan will be paid and how much it will ultimately cost before agreeing to any terms of the loan.

Most importantly, if served with a summons to appear in court for an unpaid debt, you should never ignore it. Instead, respond as soon as you can, and if you're not sure where to start, SoloSuit can help you create an attorney-approved answer within minutes!

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

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>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit: A Student Solution To Give Utah Debtors A Fighting Chance

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