Payday loan organizations may sometimes be run by shady individuals which try to implement terms which may not be legally binding. In some situations they may threaten individuals which obtained a payday loan with criminal prosecution and jail time if they are unable or unwilling to repay the loan amount. While this might sound intimidating there is no circumstance when an individual would go to jail for failure to repay a personal financial debt. This is because loan obligations, without any type of fraud, are considered civil offenses and not criminal.
A payday loan organization, like any other organization which issues credit to individuals, must follow certain rules and regulations established by state and federal government. The primary regulation which governs debt collection was created by the Federal Trade Commission and is called the Fair Debt Collection Practices Act also known as the FDCPA. in section 807 of the FDCPA it states: "The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action." As such, it is against the law for any creditor to make any threats for criminal prosecution for non-repayment of debt.
The FDCPA also clearly stipulates how the creditor is legally able to contact you and under what restrictions and to whom they are able to speak about the debt in question. The guidelines are to prevent overzealous creditors from collecting on outstanding loans which would border on harassment. Harassment would include, but is not limited to, calling at unreasonable times, making threats against either the debtor or their personal property and informing friends and relatives or coworkers about the outstanding debt. Creditors are only legally able to call between the hours of 8 AM to 9 PM or any other time that you as the debtor specifies it is okay for contact.
The key, as with most other situations, is understanding your rights under the law. By having access to and an understanding of the FDCPA you'll be able to counter any claims a creditor tries to take against you which are not explicitly spelled out and legally viable options when trying to collect an outstanding debt. Harassment and threats, especially any type of threat involving physical harm, can be easily stopped with basic knowledge of the law.
You as a debtor are legally responsible to repay any loan which you assume under the terms of which it was taken. But the fact that you sign the document stating that you will repay a loan doesn't also mean you signed away all of your rights to a third party. By understanding the Fair Debt Collection Practices Act you can protect yourself and your property from baseless threats and claims by creditors. Taking a payday loan is not an ideal situation for any individual as they are high interest and can often have onerous terms but you are still afforded certain legal rights regardless of the type of loan you take.
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