In addition to the challenges of finding a job, finances for felons become a major issue.
Felons who are able to find a job have an income. There may still be times when they are unable to pay their bills and turn to a payday loan for immediate relief.
This blog post will address the issue of whether payday loans can file criminal charges.
- What is a Payday Loan?
- Using Payday Loans
- Filing Charges for Not Repaying a payday Loan
- Alternatives to Payday Loans
- Steps to Higher Credit Scores
- Supporting a Felon in Getting a Loan
What is a Payday Loan?
A payday loan is a short-term, high-interest loan intended for emergency purposes.
A payday loan is also known by other names. It may be called a cash advance loan, deferred deposit loan, or post-dated check loan.
These types of loans can be obtained either in person or online. A borrower provides some personal and financial information requesting a loan for up to $1000 depending on the state and its laws.
Payday loans give lenders access to borrowers’ checking accounts or require a post-dated check for the amount borrowed plus interest to be written to the lender.
These loans are typically for two weeks and have an annual interest rate of as much as 400%.
Using Payday Loans
As many as twelve million payday loans are made in the U.S. annually. They are available to anyone with identification, a checking account, and a job regardless of their credit rating.
These loans are mainly for people with no credit card or savings account.
Characteristics of frequent payday loan borrowers are separated or divorced renters earning less than $40,000 per year and are often minorities without a college degree.
Payday loans are good for emergencies for those with poor credit and limited financial resources as they don’t require a credit check.
Payday loans are good for a one-time emergency but not for ongoing expenses even when money is tight.
It is essential to repay payday loans as soon as possible due to the extremely high interest rates.
Those who cannot repay the loan on time often incur additional fees as they renew or rollover the loan with more interest being added over a short time.
Payday loans are banned completely in twelve states: Arkansas, Arizona, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, North Carolina, Vermont, and West Virginia.
There are also six states with no limit on payday loan interest rates: Delaware, Idaho, Nevada, South Dakota, Utah, and Wisconsin.
Filing Charges for Not Repaying a Payday Loan
According to the Fair Debt Collection Practices Act threats of criminal charges against payday loan borrowers is against the law. The exception to this is for borrowers who never intended to repay the original loan, called absent fraud.
For those who fail to repay the loan on time, collection companies often threaten to file criminal charges. The law is that no one can be arrested for not repaying a debt unless it was fraud. Otherwise, not repaying a loan is a civil offense.
This allows the collection company to file a judgment against the borrower, permitting the loan company to sue for repayment.
The only one who can file criminal charges is the district attorney. Even then for payday loans, it is usually for not responding to the lawsuit suing for collection of the debt.
If a collection company threatens to arrest someone, then contacting an attorney is the best course of action.
It is essential not to give any personal information to a caller saying they are collecting on a payday loan. Felons should contact local authorities immediately.
There are resources for helping felons deal with debt.
Alternatives to Payday Loans
Rather than turn to a payday loan, there are other options for felons to consider:
- Work out a payment plan with a creditor
- Transfer money from a savings account
- Borrow money from a family member
- Apply for a traditional small loan
Times are difficult, but felons have options to improve their financial standing through contacting a credit company and raising their credit score.
Steps to Higher Credit Scores
There are steps that can help repair credit. It isn’t easy even without the felony. Having that criminal record makes it more challenging to accomplish.
One of the first things is to have a steady source of income. That means finding a job, which felons know can be a major obstacle.
Make certain the information used in the credit report is accurate. Incorrect information can lead to more difficulties in raising their credit score.
Another step is to pay all bills on time. Late payments, especially from credit sources such as credit cards is a major factor in the credit score.
Also, reducing the amount owed is important. This is difficult, but it can begin by not using any current credit cards.
An essential step is to consult a credit advisor. They can assist felons with their particular circumstances.
Supporting a Felon in Applying for a Loan
For families of felons wanting to get a payday loan, stand by them. All of you have been through extremely difficult times already. Don’t let your loved one give up.
Remind them there are other ways to get money besides a payday loan.
They have dealt with finding a job.
Be square with them and let them know the importance of looking at their options. If the decision is to take a payday loan, let them know the importance of repaying it on time.
Remind them of how proud they will be to live an honest life and re-establish their credit. That will provide them the opportunity to establish more responsibility again.
After all, that new life with honesty and financial responsibility is important.
So what do you think about this blog post about whether a payday loan can file criminal charges? Have you or someone you know been in this situation? What was that experience like, and how were they successful? Please tell us in the comments below.