Debt collectors, and even the payday lenders themselves, sometimes threaten borrowers over the phone that they would be arrested for not paying back their payday loans. While it is a way to recover the money by making the borrowers concerned about the consequence of nonpayment, is it really possible? Before that, let us be clear that only nonpayment or delay in scheduled payment is not the reasons why the financing companies call people, or in some cases, their agents/staffs make a visit. It only comes to that point when a borrower not only doesn’t pay off but also does not contact the lender beforehand to express his inability. In this situation, it is normal for the lender to doubt the intention of the borrower. Therefore, it is better to keep in touch with the lender and resolve the issue by finding an alternative way to get debt free- maybe by paying in installments.
No matter how much it has been hyped, according to the law, in the US no one can be sent to jail for not paying back any form of debt- including payday loans. It is unconstitutional. For any act to qualify to be punishable by arrest needs to be a criminal act. Not paying off loans of any kind is not considered to be a criminal act by the law in America. In fact, for a lender or debt collector to threaten people with arrest could be a punishable offense. Therefore, instead of getting scared over those threatening phone calls, you could register a complaint against the lender at the Consumer Financial Protection Bureau (CFPB). It is worth noting too, that many lenders are not recognized by the state, and therefore they cannot go to the court to sue you or ask for your wage garnishment. In this case, threatening arrest over phone seems to be a good strategy to them.
Now that you know the reality, make sure that you have a dialogue and communication with the lender before the due, if at all you are not able to pay. Although you cannot get arrested, it is still a troublesome situation when you default a payday loan.
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