A payday loan is an unsecured loan, which can be provided for everyone with a job. You just need to log on to money lending companies offering this type of loan, file your application and wait for the money to be deposited to your back account ready for your withdrawal. It's fast and it's easy.
What happens when you suddenly lose your job, thanks to the recession? Well, you cannot and must not default on your payments lest these consequences hound your life until you fully settle your payday loan.
Well, it's a bit of an exaggeration but nonetheless inconvenient. Money lending companies will employ all forms of communication to make you pay your debts, which can range from phone calls, e-mails, demand letters and personal visits.
Don't think either that these forms of communication will happen once or twice. You will be subjected to many of these demands until you pay up in full.
The lending sector offering payday advances is a tight-knit community, with companies servicing a specific area in the country. As such, it can be easy to blackball debtors who default on their payments.
When you apply in one lending company, you never know if and when they have been informed of your bad credit history within the industry. It is bad enough that you were able to secure the payday loan with your spotty credit history with mainstream financial institutions (i.e., banks) but to incur notoriety for unpaid loans within the industry is worse.
Thus, you have to pay your loan even when you suddenly lose your job. Find ways to pay it; communicate with the company to negotiate for easier terms; dip into your savings; sell off some of your assets; find another job; start a small home-based business. Whatever you do, don't default on your payday advance because you never know when you will need to take out another one.
And don't forget either that your credit score will suffer, either directly and indirectly. Keep in mind that you will be required to issue a check against your bank account and incurring a bouncing check will be reflected in your credit rating.
You will not go to jail for unpaid debts like a payday loan, that much is basically true. However, this does not mean that legal action will not be taken against your remaining assets by the lending company. They can and they will, again that much is fundamentally true.
When the lawsuit ends in the lending company's favor, and most of the time it will, you will be forced to settle your payday loan through bank account levies, property liens or wage garnishment. The courts will decide how you pay off the debts depending on your capacity to pay but whatever the method used, your expenses to pay these unsecured loans will definitely increase what with lawyer fees, transportation costs and other incidental expenditures related to civil judgments.
Indeed, when you suddenly face the life of an unemployed individual, it is always best to find ways to find the money to settle your payday loan. Communicating with the company about your situation can be your first step. You will be surprised at how understanding the staff can be!