Can I face imprisonment for not paying my payday loans?

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Can I face imprisonment for not paying my payday loans?

I have 4 payday loans that I am currently trying to pay off but I am having complications doing so. I have obtained all these loans on-line so I know the companies are located in NY. I was wondering if NY state law still applies to them? The companies are harassing me at work and at home; more importantly at work. Additionally they are threatening me with imprisonment. Do I have to worry about jail? I am trying to work out a payment agreement with them but they seem like they don’t want to work with me. What exactly are their rights here? And what are mine?

Asked on June 23, 2011 under Bankruptcy Law, New York

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

1) Falling on hard times or being unable to repay loans does not, by itself, constitute a crime and will not result in jail time. However, taking out loans under false pretenses or without any intention of repaying them would be a criminal offense (for example, fraud). Thus, the key issues are a) did you intent to repay them or not; and (b) what does the situation look like to outsiders, such as the loan companies or police. That is, if based on the circumstances of how and when you took out the loans, it could reasonable appear that you took them out not intending to repay (for example, knowing that you did not have the income or assets to repay all four loans), which could potentially result in criminal liability.

2) Creditors do not need to agree to a payment plan; they have the right to insist on payment in full when due. If the debtor does not pay the creditor(s), the creditor(s) could sue; if they sue and win and the debtor still doesn't pay, the creditor(s) could look to collect by putting a lien on property, garnishing a bank account or wages, etc.


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