If you need money quickly, a payday loan can seem to offer the best solution. There’s very little paperwork involved, and anybody at least 18 years old with a regular job and an active checking account can qualify.
The problem starts when you need to repay the payday loan company from your next paycheck.
Don’t have the money to repay the payday loan company? Enter the debt collector
Although the borrowing cost can seem reasonable in dollar terms, the annual percentage rate (APR–the yearly rate charged for the payday loan) for payday loans is often astronomically high. So, when the time to repay comes around, many borrowers take the easy way out. They renew or roll over their loans. According to one estimate, four out of five payday loans are rolled over.
However, many states have imposed restrictions on rollovers. As a result, there may be no option but to pay.
And if you don’t have the money to repay, it won’t be long before you hear from a debt collector.
Payday loan debt collectors can be a real nuisance. Some of them call late at night or early in the morning to harass you. There have been instances when debt collectors call the borrower’s family and friends and tell them about the money owed to the payday loan company. They could also deliberately call borrowers at work and pester them for payments.
Fortunately, there are several things you can do if you find yourself being hounded by debt collectors. In this post, we’ll tell you about the laws that govern debt collection. The Fair Debt Collection Practices Act (FDCPA) says that debt collectors can’t use abusive or deceptive practices to collect money from borrowers. Neither can they call you again and again and ask for repayment. In fact, there are plenty of government rules and regulations to protect borrowers from debt collectors.
First, check if the person contacting you is a legitimate debt collector
Before we get into the rules that govern debt collection, it could be helpful to talk about a related topic–debt collection scams.
The person who contacts you to repay your payday loan debt may not be a genuine debt collector at all. You could be the target of an elaborate scam to steal your money.
How can you tell the difference between scammers and genuine debt collectors?
The first thing you should do is ask for details about the debt you’re being asked to repay. If the person at the other end of the line doesn’t provide the correct information, you could be dealing with a bogus debt collector.
Other possible tell-tale signs of fraud are:
- The caller uses aggressive language and threatens to send you to jail.
- You’re asked to pay by money transfer or prepaid card.
- You’re told that they’ll contact your employer or family and friends if you don’t pay immediately
If you think the caller isn’t legitimate, ask them to furnish a written “validation notice”. This is a letter that the debt collector is required to issue. It contains information about the debt collector, the details of your debt, and several other details. You can see a sample here.
You could also submit a complaint to the Consumer Financial Protection Bureau.
Take the threat of debt collection scams seriously. There has been an uptick in this type of fraud during the COVID-19 pandemic.
Borrowers have the right to tell the debt collector to stop contacting them
Borrowers need to be aware of their rights under the Fair Debt Collection Practices Act. You should know that the collector isn’t permitted to call you before 8 a.m. or after 9 p.m. And you can ask them not to call you at work.
In fact, it’s perfectly within your rights to ask them to stop calling you altogether.
Here’s how you can tell the debt collector to stop contacting you:
Mail the debt collection company a letter saying that they shouldn’t contact you. Here’s a sample letter you can use:
Debt collector response sample letter provided by the Consumer Financial Protection Bureau
Remember to keep a copy for your records. It’s also a good idea to send the letter to the debt collection agency by certified mail and pay for a “return receipt.” This will ensure you get confirmation when they receive your letter.
Now that you have followed this procedure, the collection agency will not contact you again. However, there are some exceptions to this rule. For example, they could communicate with you to convey that they plan to file a lawsuit to recover the money you owe.
Don’t fall prey to unfair debt collection practices
There are a set of well-defined rules within which debt collectors are required to operate. They aren’t permitted to use obscene language or threaten you. Additionally, they aren’t allowed to tell people about your debts. However, they can speak to your friends, family, and other individuals to inquire about your address and where you work. But they aren’t usually permitted to contact them more than once. Also, when they speak to others, they can’t tell them about your debts.
If you think that a debt collector has broken any of these rules, you can submit a complaint to the Consumer Financial Protection Bureau.
The best solution for your payday loan debt–payday loan consolidation
If you’re looking for payday loan help, payday loan consolidation can provide the ideal solution.
Here’s how it works. If you’re overwhelmed by the level of payday loan debt that you need to repay, contact us for a free consultation. We’re experts in the field of payday loan consolidation and debt management. When you call us, one of our debt settlement experts will ask you a few simple questions and explain how we work. We’ll tell you how you can reduce the interest and penalties you’re being asked to pay. Some of the other benefits of payday loan consolidation are:
- No more calls from debt collection agencies.
- We’ll negotiate a lower monthly payment as well as a reduced interest rate on your payday loans.
- We’ll put a stop to lenders taking money out of your checking account.
It’s in your power to put a stop to the harassment you’re facing from debt collectors. Just give us a call and let us do the rest.