Hi,
I took out a payday loan and have defaulted because my bank account is overdrawn. They are leaving voicemails stating it is going to the legal department and to court. Is this a criminal matter or civil as in they can only sue me, or can I be in criminal trouble for defaulting on a loan? Please, only legitimate advice and answers.
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They shouldn’t need to… the interest rates are so high on those loans that people should know better than to either take out such a loan or default on it. What they can do is harass you to the point of repaying it, while it’s defaulted status hurts your credit score.
Defaulting on a payday loan is not a crime and can’t result in any criminal charges. If fraud is used to take out the loan, the individual can be prosecuted for that–but otherwise, such debt-related issues are not considered to be a criminal matter in the United States. They can, however, sue you in civil court.
That depends on the state. Most states specifically don’t allow payday loan companies to use the criminal “Hot Check” laws to collect on defaulted loans. In those states the only recourse is through civil court.
If you are in one of the few states that do let them use the hot check laws then there is no difference between the NSF check you wrote to them and one you might write at a grocery store.
Civil