pay day loan debt
i owe 12 to 13 pay day loan places i cant afford to keep paying them & rewriting the same day because its making me behind on other bills. im stressed out behind what i got myself into. i took on a 2nd job but still cant seem to get ahead . can i go to jail if i stop paying ? what can or should i do to consolidate this debt ? i live in neb can someone help me please. Is this against the law that i took out this many loans even though im still paying on them ?
1 Answer from Attorneys
Re: pay day loan debt
You won't automatically go to jail if you stop paying. There are a variety of possible scenarios that may happen, and keep in mind I do not practice in Nebraska so small claims procedures may be a bit different there.
Anyways, if you stop paying the likely action the payday loan company will take is:
1) They will send you to collections
2) If you don't make payment arrangements they will eventually sue you for the money.
3) You can go to court and request a trial to delay the entry of judgment (and also dispute the amount that they claim you owe, but you need evidence).
4) Keep in mind the astronomical interest rate continues to accrue this whole time so you will wind up with a judgment of much more than what you actually borrowed.
5) Once they obtain a judgment, there are a few things the creditor can do. One would be a wage garnishment, if you have wages to garnish. If you do have wages to garnish, that's usually fine with the ceditor. They can also garnish your accounts.
6)If they do not know if you have any assets, they may file a citation to discover assets. If you do not appear, then, in Illinois at least, a Rule to Show Cause or Contempt Citation is issued. If you still do not appear, then it is possible to go to jail. But that is months after a judgment is even entered. And you'd have to actually not appear at court. If you appear you will not go to jail. Also, if you own any real estate, after a judgment is obtained, a creditor will typically file a lien against any real estate of record that you own.
Options to consider in your situation:
1) Taking out a low interest loan that can pay off all of the payday loans, so that you can actually make a dent in the debt with one monthly payment (typically you need decent credit to accomplish this, if you are current on your payments, then this may be possible). If you own any property, this is probably the best option, at least if you have any equity.
2) You can file bankruptcy. A Chapter 7 will wipe out the debt with no more payments needed. A Chapter 13 requires monthly payments. I don't know based on your facts which one you would qualify for, but either way it's cheaper than paying the interest on the loans as is. It won't perform miracles on your credit, but if you are in this siutation it shouldn't do much damage to it.