A payday loan is a short-term loan that can be borrowed, based on the borrower's personal check being held for a future deposit, or electronic access to the borrower's bank account. Borrowers have the option of borrowing a certain amount of money, which varies by the lender, and using their personal check as a promise to pay, as well as the contract that they have signed. A payday lender will keep the personal check in the borrower's file, and when the payment is due, the borrower may come in and pay the loan in cash, or authorize the lender to send the check through their bank. The lender has permission to access the borrower's account if the loan is not repaid.
If a payday loan is not repaid, the lender may not threaten criminal charges against the borrower. The borrower may not be prosecuted by the law, or brought up on criminal charges. The loan contract will be breached, but according to the court of law, it is not punishable by jail time. The payday lender is advised that criminal charges can not be brought up against borrowers when they open their facility.
The payday loan lender may file a civil lawsuit against the borrower for not repaying their loan. This suit will take place in small claims court, and a judge can order the borrower to repay the loan in full, plus any fees associated with the loan, and court costs. The borrower may refuse to pay the loan, but if the court or judge rules in favor of the payday lender, the borrower will have liens against them. The court can rule that the borrower's employer garnish wages and pay the payday lender.
Selling Assets And Property
A payday lender may not be able to file criminal charges, but they may be allowed to force the borrower to sell assets to pay the money. If the borrower no longer works, there are no wages to be garnished. Or if they receive Social Security benefits, the law will not allow payday lenders to garnish that money. However, the borrower may be required to sell assets or property to repay the payday loan and any fees or court costs that were incurred.
Even though a payday lender may not file criminal charges against the borrower, a bank can. When the payday lender processes the borrower's check with their bank, the bank may choose to pay the check or refuse payment. If the borrower does not pay the bank any insufficient funds fees and charges caused by not repaying the payday loan, the bank may file criminal charges against the borrower or account holder, which are punishable by jail time.