A payday loan is an unsecured money lending activity between a borrower and a lender. Whenever a person is in urgent cash need, he applies for a cash advance, and a financing company finances him for a short-term without any collateral. Where does a payday debt collector come from, then? The debt collector comes into picture when the lender needs it to collect debts from the borrowers who do not make the scheduled payment.
– Usually, the lenders assign the collection agency while retaining the lien (legal right) as the lenders, and give them a certain percentage of the collected debt for their work.
– However, sometimes it could be a bit different. Some collection agencies buy the lien from the original lenders in a lesser price than the principal amount and try to make more profit by collecting the payments from the debtor. In this case, they hold the legal right to recover the money from the debtors, and the original lender’s role gets over.
Debt collectors have been directed to follow the Fair Debt Collection Practices Act (FDCPA) by the Federal Trade Commission (FTC). However, not all the time they follow the directions properly. Some debt collectors go beyond their limits to harass debtor for payment. Some even threaten people to make them arrested. That is not acceptable. However, those collection agencies that have bought the liens from the original lenders, can sue the debtors in the court asking for their wage garnishment. That is not that easy, though. A debt collector can only go to court if the original lender is recognized by the state. If the original lender is not registered, then the debt collector loses the legal right to sue the debtor.
Even if the financing company is state registered, and the debt collector buys the lien legally from it, just by appealing in the court does not result in wage garnishment of the debtor. It has to win the case in the court, and the borrower by then must not have filed for bankruptcy.
Therefore, it is a challenging process for the debt collecting agency to take a borrower to the court for defaulting a payday loan. At the same time, a borrower should not default a cash advance intentionally which might lead to wage garnishment in some cases.
Thanksgiving Travel and Last-Minute Expenses Thanksgiving is one of the busiest travel times, with millions… Read More
It is not uncommon for unexpected expenses to arise at any time in today's fast-paced… Read More
In times of financial emergency, you may need quick access to cash. Overnight payday loans… Read More
Having a good credit score is crucial for securing favorable terms on loans, credit cards,… Read More
When unexpected expenses arise, finding financial breathing room can be a challenge. Embrace the flexibility… Read More
When financial emergencies arise, having access to quick cash can be crucial, especially for those… Read More