I get a couple questions here and there.  Recent I received the following question in my e-mail Inbox from a person that I will call, “Frank.”

I’ve been in trouble with money lately.  I was recently cut with hours and I’m having a hard time keeping my electric, etc on.  I recently pulled a $500 loan at a local payday loan shop.  What happens if I don’t pay my payday loan?

First off, you’ve probably signed a contract with this particular lender.  Somewhere in that mambo jumbo, you have probably found out what interest rate you’re going to pay, as well when your loan is going to mature.  Yes, payday loans are crazy!  While there are a few that may help you out, there are many that will charge you 500% in interest rates!

Let’s take the $500 for example.  Let’s say that you don’t pay anything on the loan.  Most lenders are going to wait until the interest adds up to a certain point.  After it reaches a certain point, you’re going to find that they will come after you in a civil court lawsuit.

Now, whenever you’re served papers from a court, DON’T ignore them.  This is bad because this gives the court the option to do many things such as garnish your wages and more.  Show up in court, explain your situation, and you should be fine.

So many people make the mistake of ignoring papers and I don’t know why.  Most payday loan lenders will most likely go this route, since they probably deal with it on a daily basis.

Overall, the worst thing that’s going to happen is that the company is going to come after you and sue you in court.  The outcome is all going to depend on what you do on your side.

While I recommend using a payday loan as your last alternative, if you have to go this route, always make sure that you can pay it off by your next paycheck.

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