All the consequences of non-repayment of payday loans are listed in the loan agreement and the handbook you received with the agreement. The consequences can be divided into two stages:
- penalty interest and payment request
- activities after termination of the payday loan agreement
Penalty interest and payment request
In the absence of payment (or delay), you may be charged additional costs in the form of interest on past due debt. Their maximum amount is defined by the Civil Code (Article 481§2) and currently amounts to 14% per annum.
After the repayment deadline, the lender has the right to call you to settle your liability. The specific way of calling is specified in your contract. Most often it is a registered letter – but it can also be an e-mail or text message.
After receiving this message, you have 30 days to settle the payment (along with additional interest and fees) – if you do not do this, the lender can terminate your contract.
Termination of the payday contract
Termination of the contract will allow the lender to require you to return the full amount of the loan in court or out of court. This means that the loan company will decide whether to refer your case to debt recovery or file a claim for payment to court.
Out-of-court debt recovery requests – recovery
Large loan companies have private debt collection departments. Their employees will try to make contact with you (they may even appear in your apartment). During the talks, they will try to negotiate repayment terms and rules. Customers often complain of the unpleasantness associated with such conversations (intrusive visits, phone calls and threats).
If you also have such problems – find out what the payday collector can do.
Smaller loan companies do not maintain such departments. It is more profitable for them to sell your debt to a private debt collector. In this situation, your debt becomes the “property” of another entity. In return, the lender receives a fixed% of its value. Depending on the assessment of the chances of getting payment – it can be 70%, 50% and even 10% of the value of your debt.
Your new creditor may take the same debt collection action as the loan company. It can also take your case to court.
Remember that over time, interest and fees related to past due debt also increase. Debt collection costs may also be charged to the debtor.
Do you want to avoid stress? Learn proven ways to pay off payday loans.
Court debt recovery request
At the first stage, the creditor will submit an appropriate application to the court. Your case may be considered in ordinary or settlement proceedings. From the creditor’s point of view, this does not matter much, as the termination of both proceedings results in the issue of a document authorizing the execution.
Does every unpaid payday pay end in court? No. The creditor decides alone to conduct a specific case. This is lengthy and generates costs. It is true that – in the event of a positive outcome – these costs are borne by the debtor. However, this may not always be the case.
In addition, court proceedings are lengthy. They also generate various costs – a company must pay a number of fees and employ people to represent its interests. Therefore, small amounts of liabilities – in the event of ineffective recovery – do not have to go to court.