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A common question often asked about payday loan debt is “can I get arrested for defaulting on a payday loan?” There are two main reasons why this question is raised. First, many unethical or illegal collection agencies will insinuate or claim outright that you can be arrested if you do not pay a payday loan debt. The second is that bad check laws do allow for criminal prosecution of those who write bad checks and since payday loans often require a check, consumers fear these laws will be used against them in a payday loan collection situation. Here we give you the straight facts on payday loan debt and arrest.

Payday Loan Collectors – Implying that you can be Arrested for Payday Loan Debt

Unfortunately, it is an all to common practice for Payday Loan Collection Agencies to imply that consumers can be arrested for payday loan debts. In some cases, these payday loan collection agencies have had fines or actions taken against them by the FTC or other state attorney generals for claiming to debtors that they can be arrested if they do not pay. However, the more frequently used approach is to imply that being arrested is a potential repercussion of not paying.

Some techniques used by payday loan collectors to imply this include: 1) referring to consumers with multiple overdue or defaulted payday loans as “repeat offenders,” 2) asking the debtor if they know that writing a bad check is illegal in their state. Technically, this is true. However, the payday collectors omit that this does not apply to checks written in the process of getting a payday loan, or 3) telling customers that they “will be located and addressed in accordance with city and state law” if they do not pay their debt by a certain time (usually the same day). Again, this is technically accurate. But, what “located and addressed” means in this case is that they will find your address and mail you a letter. Payday Loan Collection Agencies use these ambiguous statements to purposely mis-lead consumers. While the statements above are not factually false, the Payday Loan Collectors are well aware of the misunderstanding that they are creating and do nothing to clarify it in most, if not all, cases.

The Truth About Payday Loans and Criminal Charges

Quite simply, the answer is that defaulting on a payday loan will not result in criminal charges in any state within the United States. Bad Check Laws are designed to protect merchants from having someone “buy” goods with a bad check, thereby essentially stealing. They are not designed to protect Payday Loan Companies who know that they are taking a risk that a consumer will not pay a loan back. However, there are other important repercussions associated with not paying a payday loan, including the potential that consumers will be sued in civil court (usually small claims courts). This can lead to a writ of garnishment being filed and customers having their wages garnished. Even being sued in small claims court will result in you being served by a process server, an experience that can be very embarrassing, especially if it happens at your place of employment. Many payday loan companies will also report to bad check databases, such as SCAN, and that may prevent you from getting a bank account in the future. Additionally, most Payday Loan Collection Agencies will now report your debt to the major credit bureaus which will impact your credit. So, there are definite repercussions to not paying a payday loan when it is due, however, going to jail is not one of them.



By: Brent Hagen

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