Taking out a payday loan may not have been your ideal solution, but it provided just the right amount to get you through until your next paycheck. Perhaps it worked so well for you that you used it a second time, or maybe when the due date came, you rolled the balance into a new loan.
Whatever the steps that got you to where you are unable to repay a payday loan, you realize now that your situation is even more serious than it was the day you first walked into the payday lender's office. It is important that you understand what happens when you default on one of these short-term loans and how to deal with the aggressive tactics such lenders often use to get you to pay.
What to expect
Unlike some states, Texas allows payday lenders to do business and puts no limit on the amount you can borrow or the interest the lender can charge. More than half of those who use payday lenders eventually default, which can create a domino effect of financial trouble, and here is why:
- The lender will attempt to withdraw the loan payment from your bank account or cash the post-dated check you offered when you signed for the loan.
- If you don't have the money in your account, the lender will try several more times to withdraw what you owe.
- Each time the lender tries to take money from your account, your bank will likely charge you another overdraft fee.
- After attempting to collect the debt for about 60 days, depending on your agreement, the lender will turn your account over to a collector.
- The lender will also report your delinquent loan to the credit reporting agencies.
Meanwhile, not only is the original loan accruing more fees and outrageous interest, but the lender is also likely harassing you with calls, emails, and embarrassing contact with your family and friends to try to get you to pay. Once a collector gets your account, you can expect more of the same aggressive tactics. This may include filing a lawsuit against you for the balance of your loan resulting in wage garnishment or even the threat of arrest for check fraud.
If you are dealing with the burden of debt, a payday loan is a risky option. If you are already under the weight of a payday loan you can't afford, you can reach out to an attorney who understands your situation and can guide you in finding solutions that will offer a brighter future.