I’ve seen people online asking if they can be arrested for defaulting on a payday loan, and I know why. Because collection agencies have unscrupulous collectors who use foul tactics to frighten borrowers who have defaulted on repayment(s). Tell the collection agency our payday loan company you are recording the phone call. Just watch what happens. It’s completely legal to say that. Don’t actually record the call – just say you are.
I can personally relate with these kinds of strong arm tactics and unfortunately I have not seen any law passed in the western world that prohibit collection agencies from uttering (or screaming) falsehoods in order to frighten borrowers embroiled in default.
So the answer is NO! You can’t be arrested for defaulting on a payday loan payment – just hang up, or if the collection agency goons are daring enough to threaten you with arrest (or they’re going to take you away in cuffs) on a document. If you don’t have the money to make a payment on your loan then there is NO sense in talking to them.
I can tell you a personal story of what I used to do when collection agencies called me with a rude and belligerent tone. Usually the collection “specialist” would be young and I would ask them if they liked their job and that I knew they didn’t. I would try and explain to them that their job went against every natural human instinct which kindness and compassion.
If they threaten you with being sued, jailed, or disgraced simply ignore them. I urge you to hang up without saying a word – you’re doing yourself and them a favor.
If you insist on speaking with the collecting representative be polite (you’ll feel better about yourself if you don’t get mean yourself) and tell them that you have the legal right to record your conversation with them. This is fun because they can’t be caught harassing you on tape because they may end up in trouble with the law themselves.
The truth is that these aggressive tactics used by collection companies often go over the line and they have more to lose than you. Besides trying to tell you that you will be arrested for delinquency, some of their employees can actually lose it on the phone and start making all sorts of outlandish threats. They may be the ones standing if front of a judge if they get caught.
However, if you default on your payday loan (or cash advance) there are some consequences to face. Your credit rating will be damaged as the payday loan company will report your delinquency (sometimes prematurely). The lender in some cases will take a borrower (client) to small claims court for payment and restitution in the form of wage garnishment. This is rarely the case. The costs the payday lender incurs while taking a borrower to court are far too much to create a positive ROI (return on investment).
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A LOAN CALCULATOR FOR CRUNCHING YOUR NUMBERS IS BELOW; Enter your loan amount, how many years, the interest rate, and payment frequency (14 for biweekly, 30 for monthly, 7 for weekly. Very helpful so you know exactly what the loan will cost you in interest payments and you will know the total COB (cost of borrowing).
8 Comments
Getting a laugh out of the Karl Rove picture. Chubby little dude.
But on point – defaulting on payments for payday loans can not result in someone being arrested. Ridiculous and I can’t believe that people would believe anyone who tells them that.
Who would get a payday loan anyway….god.
Thanks for this information. I had a collection agency calling here everyday for a month threatening my roomate (not kidding here) saying all sorts of stupid things
Don’t worry about it, you can’t be arrested for this! Just HANG UP!
Ever heard of call display, or don’t the phones in jail have that?
If they could arrest you for missing payday loan payments the cops would have to hire about 300,000 more patrol officers in Los Angeles alone.
Argh….why to borrowers even listen to these reptiles.
Like the “one phone call from jail” joke.
But let’s face it when you are behind on payments and you are actually using payady loan or cash advance companies you’re going to have to pay it back or you’re credit rating is going to be destroyed. These companies really get nasty and “jump the gun” like Peter mentioned above.
Great article Peter.
i just had a call last night saying I defaulted and it was fraud. I was told i would be served and arrested at 11:00am on monday if i didn’t pay immediantly. I am terrified
Don’t be terrified. They can’t do anything to you and they are hired to simply read off a script. I had a friend who did this for a summer job.
It’s all bull – RELAX!!!
I tried recording the collection agents phone call thing, and it worked perfectly. Even better, I had a one collection agent go ahead and get nasty and threaten me with jail if I didn’t pay up – I gave the recording to the cops and the cops said they sent it to the proper authority – will be fun to see what happens. I might never know and the cops will probably never tell me what happens with the recording.
Anyway, they’re all just blowing smoke. You can’t go to jail for missing loan payments.
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[...] At Clf we get allot of traffic from borrowers who have collection agency scumbags chasing them, harassing them, and being downright unsportsmanlike, by threatening to have them put in jail. [...]
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