When you take out a payday loan, you are borrowing money against your next paycheck. These loans typically have high interest rates and short repayment terms, which can make them difficult to repay on time.
If you fail to repay a payday loan, you may face serious consequences, including harassing phone calls.
What it means to default
To default on a loan means failing to repay it according to the terms of an agreement. This situation can happen if you are unable to make the full payment on the due date. It can also happen if you stop making scheduled partial payments.
Consequences of default
When a representative of a payday loan establishment attempts to cash your check but finds insufficient funds in your bank account, the lender may take several actions to collect the debt. One common tactic is to contact you by phone to demand payment. While lenders may do various things in an attempt to reclaim their money, the law prohibits them from harassing or threatening you.
Effects of closing your bank account
Closing your bank account to avoid repayment of a payday loan can lead to several negative consequences. The lender may continue to pursue repayment through other means, such as by contacting you directly or by selling the debt to a collection agency. Additionally, closing your bank account while in default on a loan can harm your credit score and make it more difficult for you to open a new account in the future.
Payment evasion through an address change
Changing your address to avoid repayment of a payday loan is also not a recommended strategy. Lenders can use various methods to track you down, including using skip tracing techniques to locate your new address. Furthermore, deliberately providing false information, such as a fake address, is fraud and may lead to legal consequences.
If you are receiving harassing phone calls from a payday lender, it is important to know your rights. The Fair Debt Collection Practices Act prohibits debt collectors from using abusive, unfair or deceptive practices to collect debts. This includes calling you repeatedly, using obscene language or making threats. It is important to take action to repay the debt and also make the phone calls stop.