Can you be in legal trouble for non-payment of a payday loan?

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Can you be in legal trouble for non-payment of a payday loan?

I have started receiving phone calls from a collection agency and called them back and were threatening to have me served with papers for fraud and malicious attempt on something else. I was in TX at the time and never closed out my bank account. I actually had to move to NC for a very sudden family issue. They had been mailing letters to an old address I have not been in since 2004. I actually thought it was a scam when they called but then today they called and said they took a hold off the served papers and then the sheriffs office called for me but I was not at my desk.

Asked on November 5, 2010 under Bankruptcy Law, North Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

As a general rule, if you default on any loan, payday or otherwise, you can certainly suffer various bad civil consequences--

Your credit rating will take a hit

You can sued for the amount you owe and sometimes additional damages (e.g. cost to collect)

If sued and you lose, the other side may be able to put a lien on property, garnish wages or bank accounts, etc.

--but you do not face criminal charges simply for nonpayment. For there to be criminal charges, there must evidence of a crime. Most commonly in this context, that would be fraud (lying on the loan application; never intending to pay it back) or passing bad checks to repay it. If the creditor believes that a debtor did act criminally and there's some basis for that belief in the debtor's actions--such as suddenly leaving the state while in default--they could contract law enforcement and seek to press charges.


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