Payday loans are simple ways of securing finance in between salary days with quick funding. These short-term financings need to be repaid by the next paycheck day. The repayments can be done by an automated clearing house (ACH) system –where money gets automatically deducted from debtor’s account on the due day– or the borrower can write a check in the favor of the lender. If a borrower does not issue a check, and his account does not have the required amount, then it is considered to be a delinquent behavior.
If the debtor contacts the lender prior to the due date asking for a rollover, then it would still be fine. However, non-communication always means the intentional default of the loan. In this situation, the financing company could assign a collection agency to recover the money from the borrower. These agencies are called debt collectors. Sometimes financing companies pay them a certain percentage of the money recovered. Some other times the debt collectors purchase the debt from the original lender at a lower price and try to recover the money from the delinquent borrower.
According to the Federal Trade Commission (FTC) of the US, debt collectors must follow the Fair Debt Collection Practices Act (FDCPA) while collecting debts from people. The FTC strictly monitors if they follow the act or not. According to the act, the debt collector can put pressure on you to pay your debts. In order to do that, they can call you between 8 am and 9 pm in your local time- but not repeatedly. They can gently explain and explore alternative ways of payment. They also can inform about the legal consequences- if any. However, they cannot show up at your work to collect the outstanding debt from you. It is strictly against the FDCP Act. Since the act clearly says that a debtor’s debt cannot be publicized, the collection agency cannot visit you at your job and talk about the loan. Even, if the collector calls to your office and asks for you, it should not be revealed that it is regarding debt collection. That is illegal. They also cannot threaten you, neither can harass. If the debt collector violates these conducts, you can complain about it to the authorities.
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