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Can I Be Arrested for Default on Payday Loan?

The question on whether one can be arrested for nonpayment of a payday loan or cash advance loan, has sometimes to come mind for many borrowers because payday loan companies usually resort to scare tactics in the effort to collect. There is no way that a person can be arrested for being in default for a payday loan unless, of course, he has taken out a loan by fraudulent means, such as intentionally providing wrong information. 

It should also be noted that it is against the law for the lending company to threaten the borrower with a jail term because of the Fair Debt Collections Practices Act. There are simply no debtor prisons in the United States. 

However, there are negative consequences resulting from a borrower’s nonpayment of a payday loan. One of these is the rapid rise in the penalties and other charges that are added to the borrower’s unpaid loan. The longer a person delays payment, it becomes exponentially harder to pay off the loan. 

Another unwanted effect of nonpayment of a payday loan is the decline in the borrower’s credit score. This score will continue to go down during the time that the loan is unpaid. The longer the debt goes unpaid and the bigger the loan amount, the bigger the credit score reduction. A person who continues to delay payments will soon find that he cannot get any other loans because his credit rating has taken such a big hit from the nonpayment of the cash advance loan.

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About Moe Bedard

My name is Maurice Bedard, but most people call me Moe. I am the founder of America's #1 Mortgage Forum, LoanSafe.org, and also a website design firm called We Create Web Designs. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications. I currently live in Carlsbad, California with my beautiful wife and children.

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