Anyone can fall behind on their monthly payday loan payments. What separates people in this situation is what they do when faced with a payday loan default. The decision you make when you fall behind on loan payments will determine the credit’s action. Let’s say you need fast cash and payday is 10 days away. What do you do? Apart from selling an asset, which you cannot do without, you can get a quick payday loan and guarantee it with a personal check. Most borrowers are aware that Texas payday loans have punitive interest rates, seeing that you request them as a last resort. They also come in handy when you would otherwise not have an alternative source of cash. The idea is to have your account debited as soon as your salary checks in. What happens if you do not honor your commitment and fall behind on payments?
Payday Loan Default – What To Do
It could happen that you don’t have access to cash. In a situation like this, you may not have enough to pay the original amount borrowed. If you had not communicated to your lender before defaulting, they will send you reminders. The polite reminders may go from irregular to constant, even several per day as time goes on. If you still fail to pay up or communicate your intention, they may start calling you. Some firms will send emails and letters through the mail.
When finally all their collection efforts fail, your lender may sell your loan to a collector. That is not something you want because some collectors get their high from nagging you. While it may start as plain nagging, it could get uglier. You will start to receive constant phone calls from your credit. They may even show up at your place of work. Some debt collectors have been known to show up at people’s doors every hour until they scare you enough to have you pay. Most online lenders do not report your failure to pay to all credit bureaus (but they will report to the three main ones, which is a damper). In a way, you could end up running your credit. Will you be jailed for it? No way. Not when it comes to online payday loans in Texas at least. The creditor may threaten legal action, but they would never follow up with it because the law does not provide for it.
Avoid Defaulting On A Payday Loan In Texas
- Talk to Your Online Payday Lender before falling behind
For a payday advance company, their intention is clear. They will start to try to collect as early as 5 am on the due date. They will keep trying throughout the day if they find that the account does not have funds or has none at all. You already know that you cannot afford to pay your mortgage and repay your installment loan. The smart action is to talk to your lender or company representative. Find out different payment and financing options for payday loans in Texas. They are not always easy to work with, but they know in advance you will not meet your obligation. This could save you the hefty charges that start accumulating as soon as you fail to pay on the due date. The law dictates that lenders be fair in their dealings, and so you have a right to be heard.
- Extend Your Repayment Period To Avoid Defaulting
With your lender in the know, you can discuss an extension. Most Texas payday loans have a limited time frame, which is the difference between the day borrowed and the nearest pay date.
If you speak with your lender way before the deadline, you could negotiate an extended payment plan (EPP), which could buy you a little time. It could also protect you from hefty penalties after the due date. You will have to qualify for the extension through the lender’s method, but that’s not difficult if you have never defaulted before. Falling behind on unsecured installment loans can have some consequences. With most short term financing it’s expected that borrowers will default from time to time. However, be vigilant in your communications with your online lender. To be on the safe side, have all your communications and agreement in writing so that they do not go back on their word.
- Talk to a Credit Counselor
There are many debt specialists in Texas. Most of these companies know the law and what happens with a default. They can attempt to get you out of a sticky situation that involves Texas payday loans. Consider this if you get nowhere with a payment extension. You could have a lawyer handle it for you. They will use legal means to negotiate an extension on your behalf and you can find numerous specialists for payday loans in Austin or other larger cities as most of these companies can help you with debt.
- Seek Protection from the courts
This option should be a last resort, but you can file for bankruptcy if you really cannot pay your installment loan or Texas payday loans. Filling for bankruptcy not only gets the bad debtors off your back, but it also gives you a clean start. It will, however, show on your financial reports, and could ding your credit scores, so it would be best if that remained the last resort.
Contact your lender before you default on loan payments
The law does not provide for jailing if you default on your monthly payment, but that does not mean you cannot be sued for falling behind on loan payments in Texas. Keep in mind, falling behind on a cash advance is not nearly as serious as defaulting on a student loan or car title loan. The Federal Government and private student loan lenders have many more options available to them if you fall behind on student loan debt. With a Texas car title loan company, you run the risk of losing your vehicle to repossession! A bad debt collector will nag you with so many calls and home visits (both day and night). If you can pay, negotiate a payment period, pay off the principal and a percentage of the interest, and then get your life back. Take stock of your finances once you have paid off the loan and are no longer dealing with the Texas payday lender. Most installment loans and payday loans are easy to apply for but much harder to pay off!