No, you will not be arrested just because you are behind on payments or can’t pay back some money on your payday loan. Creditors are not legally backed to arrest a debtor for missing a payment. US courts only order jail time for criminal offenses and failing to fulfill payment obligations is considered a civil offense rather than a criminal one.
However, since it’s a civil offense, a creditor may sue you in a civil court for not fulfilling your own part of the agreement. It is the failure to appear in court if summoned by her that can get you arrested. It is important to honor a court order.
The court is a perfect place to present all concerns you may have about your payday lender and practices. For instance, it might be worth mentioning if they ask for wages or additional fees not mentioned in your payday loan contract.
According to the Fair Debt Collection Practices Act, it is unlawful for a creditor to threaten a borrower with jail time. You may have a point against the creditor if this abusive behavior is properly documented and reported to the Federal Trade Commission, Consumer Financial Protection Bureau, or the State attorney-general’s office.
What Can Happen if I Fail to Repay?
Although you may not be arrested for failing to repay the payday loan you have taken, your credit score may take a serious hit. Missed payments may reflect in your credit report and lead to a dip in your credit ratings.
Also, depending on the terms and conditions of the contract, a creditor may garnish your wages. Wage garnishment refers to a creditor obtaining an order from the court or a government agency to subtract a part of the borrowed sum from the borrower’s wages.