What is the statute of limitations on payday loans
The statute of limitations is the amount of time you’re legally liable for your debt. This varies from state to state, and in some cases, it applies to payday loans differently than other types of debt. Typically, the statute of limitations begins when your payments become delinquent, not when you sign the initial contract.
Don’t take your debts having a statute of limitations as an invitation to default. It's just a time limit on how long a lender or collection agency has to collect your debt. This can range from six to 10 years. If you do default, the lender can still attempt to collect or sell to a collection agency.
One drawback to payday loans is you give the lender access to your bank account. If you do default, the lender will make automatic withdrawals from your bank, which can lead to overdraft fees and affect your credit.
If you do become delinquent on your payday loan and it does go to collection, it's important to know your rights. Despite any threats, you cannot go to jail for unpaid debt, but the lender or collection agency can sue you. Just because your debt has an ostensible expiration date doesn’t mean you can wait it out. If you’re having trouble meet your payments, contact the lender to see if you can work out a payment plan or alternative arrangement.
If you find yourself having to roll over your payday loans or you start getting overdraft fees from the lender’s attempts to withdraw payments from your account, consolidation may be an option.
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