Payday loans are sort of a blurry issue for most state legislatures – technically not illegal in most states, but looked down upon everywhere. So, the question can be raised – if you decide to simply not pay back a payday loan, what happens?
First off, it varies widely state-to-state. In some states lenders have literally no ability to do anything but harass you and in some states they can file serious lawsuits and wreck your credit score.
However, just because there are laws governing the collections of payday loan debts, doesn’t mean that all lenders are going to play by the rules. In Texas for example, there are laws explicitly forbidding payday lenders from even threatening to file criminal charges with their customers (except in unusual circumstances). Nevertheless, a Texas Observer (newspaper) investigation found over 1,700 instances in which payday loan companies pursued criminal charges against customers in only San Antonio, Houston, and Amarillo. If that’s what’s going on in just a few cities in a single state, it’s hard to even imagine the tactics payday lenders all over the U.S. are using to force their customers to pay back their debts.
Remember – payday loans are a very cutthroat business – the phrase “friendly neighborhood payday lender” is not a phrase we are accustomed to hearing, as friendly neighborhood payday lenders simply do not exist, save for maybe a few scattered stores around the country.
It’s not like cash advance lenders have reputation to hold up to – most lenders have terrible reputations, as they’re constantly dealing with angry customers. It’s really just a fact of the business – it generally involves people in short-term dire situations and people who stay in dire situations for prolonged periods of time (the people who can’t pay back the loans). Whenever there’s financial trouble at hand, it always becomes a battle of blood, sweat, and tears, rather than a fruitful arrangement where everyone ends up happy.
In truth, there’s only so much a lender can do to attempt to get their money back. They’re likely to employ devious tactics, but in the end, they’ll probably just end up sending a collection agency after you.
Really, trying to skirt paying back a small loan is just a bad idea. They’ll ruin your credit score, threaten you, call you multiple times every single day for months on end, and all in all, just make your life a hassle. If you can find any way at all to pay back the loan, you’d be very wise to do so. Payday lenders are in a tough business and they never take kindly to customers who try to pull a fast one.