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Can Payday Loans File Criminal Charges?

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Finances will likely be a major issue in addition to finding a job. It may be a challenge to pay your bills, and you might consider a short-term loan like a payday loan. If you can’t repay that loan, then what?

Let’s look at the issue of whether or not payday loans can file criminal charges.

In this blog post, we’ll cover the following:

  • What Is a Payday Loan?
  • Requirements for a Payday Loan
  • Background Check?
  • What Happens if You Don’t Repay the Loan on Time?
  • Filing Charges for Not Repaying a Payday Loan
  • Alternatives to Payday Loans
  • Steps to Higher Credit Scores


What Is a Payday Loan?

A payday loan is a short-term, high-interest loan designed for emergency situations.

This type of loan might also be called a cash advance loan, deferred deposit loan, or post-dated check loan. 

These loans are mainly for people with no credit card or savings account with as many as 12 million payday loans taken out in the U.S. annually.  

Payday loans are good for emergencies for those with poor credit and limited financial resources as these loans don’t require a credit check.

While payday loans may be good for a one-time emergency, they are not designed to cover ongoing expenses even if your money is limited. These types of loans can be obtained either in person or online. You just need to provide some personal and financial information, and you may be able to request a loan for up to $1,000 depending on the state and its laws.

Payday loans give lenders access to borrowers’ checking accounts or require a post-dated check for the amount borrowed plus interest to be written to the lender.  

They are available to anyone with identification, a checking account, and a job regardless of their credit rating.

These loans are typically intended for two weeks and have an annual interest rate of up to 400%.

Many lending institutions that offer payday loans provide them to borrowers with no credit check and permit those with bad credit ratings to qualify.

Requirements for a Payday Loan

The requirements to get a payday loan are actually rather simple. While the regulations do vary from one state to another, there are several features that are common to almost all payday loans.

The federal government’s Consumer Financial Protection Bureau (CFPB) indicates that to qualify for a payday loan, most lenders require borrowers to:

  • Be at least 18 years old
  • Have a checking account
  • Provide proof of income and a valid ID

Having proof of income can be difficult for a lot of felons who struggle to get and keep a job. 

Payday loans are allowed by law in 38 states, though they are banned in 12 states: Arkansas, Arizona, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, North Carolina, Vermont, and West Virginia.

There are also six states with no limit on payday loan interest rates: Delaware, Idaho, Nevada, South Dakota, Utah, and Wisconsin.

Click here (Legal Status of Payday Loans by State) to find out the laws regarding payday loans in the state in which you reside. 

Background Check?

Now you are used to a background check for almost all things you apply for since your conviction.

How about a payday loan? There is no direct background check that is completed when you apply for a payday loan. Notice we said there is no direct background check. However, there could be an indirect background check. How is that?

Simple. If you are in the position of needing a payday loan, the typical regulations state that you must provide proof of income. Well, if you have income, you must have a job. To get most jobs you have to go through an employer background check.

So, you still can’t really get around that unless you work in a job that didn’t require a background check for employment. 

That could be for a small company or perhaps you work for a family member or friend who knows you well enough to hire you.

Can’t quite escape it entirely.

What Happens if You Don’t Repay the Loan on Time?

It is essential to repay payday loans as soon as possible due to the extremely high interest rates.  

There are a couple of possibilities if you don’t repay the loan by the due date. For states in which a rollover is allowed, you may be permitted to pay only the fees that are due at the time. The lender may extend the due date of the original loan.

The lender could charge another fee while you would still owe the original balance in full.

In some states, the law requires payday lenders to offer an extended repayment plan if you have difficulty repaying the loan by the due date.

Filing Charges for Not Repaying a Payday Loan?

Now to get around to the original question. Can a payday lender file charges against you in the event you don’t repay the loan? That could be a major difficulty if that were true.

Let’s look at this possibility.

For those who fail to repay the loan on time, collection companies often threaten to file criminal charges. 

The Fair Debt Collection Practices Act maintains that threats of criminal charges against payday loan borrowers is a violation of the law. So you may be exempt there. However, there is an exception. The law states that no one can be arrested for not repaying a debt unless it was fraud. Otherwise, not repaying a loan is a civil offense.  

This is for borrowers who never intended to repay the original loan in the first place, which is called “absent fraud.” This allows the collection company to file a judgment against the borrower, permitting the loan company to sue for repayment.

The only way for legal action to be taken against you in such circumstances is through the District Attorney in the county in which you live.

For payday loans, legal charges are usually for not responding to the lawsuit against you for debt collection. If a collection company does threaten to arrest you, then contacting an attorney is the best course of action.   

It is essential not to give any personal information to a caller saying they are collecting on a payday loan.  In this instance, you should contact local authorities immediately.

Now, we aren’t recommending a payday loan because of the high interest rate and the short time you have to repay that loan. You are just setting yourself up for a disaster by going in that direction.

There are resources for helping felons deal with debt.

Alternatives to Payday Loans

If you don’t apply for a payday loan for a financial emergency, what can you do?

Instead of looking for a payday loan, there are other options to consider. You could speak with a creditor such as a bank and try to work out a payment plan. If you have any additional funds, you could transfer some of them to cover the emergency.

You might also be able to borrow money from a family member or friend. There are also more traditional small loans that you may be able to qualify for. All of these options are preferable to a payday loan.

A more general recommendation is to work on improving your financial standing through contacting a credit company to address raising your credit score.

Steps to Higher Credit Scores

As a felon, you face many challenges financially. You don’t have to stay stuck with a poor credit score.

There are steps that can help you repair your credit. Having a criminal record makes it more challenging to accomplish. One of the first things is to have a steady source of income, which means finding a job. We know that is easier said than done.

Here are a few tips to help you set your credit score right again.

First, make certain the information that appears in your credit report is accurate because incorrect information can lead to more problems in raising your credit score.

Another step is to pay all bills on time. Late payments, especially from credit card companies, is a major factor in your credit score. Also, finding a way to decrease the amount you owe is important. We know this is difficult, but you can start by not using your current credit cards.

An essential step is to consult a credit advisor who can assist you in your particular circumstances.

We know that financial difficulties are frequent, even for those who don’t have a felony conviction. A criminal record can be a challenge that could lead you to consider making money in a less than legal manner, much as you may have done in the past.

Whatever you do, don’t give into the temptation to break the law again. You don’t want to go back to prison again and be one of the 2/3 that returns again within the first two years. Give yourself a chance to succeed. You don’t have to make those mistakes again.

You aren’t defined by your mistakes but in how you recover from them. You can do it with the support of family and friends who want you to succeed in living an honest life.

Don’t let yourself and them down. Hang in there and overcome.

So what do you think about this blog post about whether a payday loan can file criminal charges? Have you or someone you know been in this situation? What was that experience like, and what happened?  Please tell us in the comments below!

1 thought on “Can Payday Loans File Criminal Charges?”

  1. I have gotten payday loans in the past. It was around the year 2003. These type of loans are a big problem. I eventually wound up closing out my checking account. So they had no way of collecting the money. The loans were for less than $500. There were never any charges filed against me and I was never taken to court. I live in the state of Texas. I made a big mistake in getting payday loans.


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