You should never ignore an order to appear in court, even if the criminal complaint was filed mistakenly. A lender would rather collect money directly from you than sell your debt to an outside collections agency. Third-party debt collectors may pay just a few pennies on the dollar to buy your debt. Get any agreement in writing, and make sure the document states that your balance will be reduced to zero.
If you fail to settle, make sure you know how to deal with debt collectors and what practices are illegal. For example, collections agents cannot call you incessantly or make false statements or threats about the amount you owe. If you think collections agencies don't bother to sue for small amounts, think again. Nearly all lawsuits against consumers today are for relatively small amounts, says Michael Bovee, president of Consumer Recovery Network, a debt settlement company.
The judge then enters a default judgment, and the court can begin to collect the money you owe on behalf of the collections agency. You should not prioritize paying the payday lender over putting food on the table or paying the rent, Saunders says. You may be eligible for community assistance plans for help with rent, utilities or food.
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One way debt collectors try to intimidate borrowers is by claiming the borrower committed fraud, which is a criminal offense. A person can face criminal charges in a court of law if they commit fraud; however, taking out a payday loan and then not being able to pay it back is not fraud.
Fraud occurs when a person knowingly takes on a loan with no intention of paying it back. In addition to having to prove this in a court of law, the debt collector would also have to prove that the borrower knew their bank account would be empty the following week when the repayment was due to be collected.
They often begin calling the borrower right away. Many do so at all hours of the day and night. Some debt collectors even resort to making threats to get the borrower to pay.
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