Payday Loan Ethics

Payday Loan Ethics

is there any legal restrictions on "last minute debt" which is not dischargeable by bankruptcy?

it seems to me that if a person knew they were going to have to file bankruptcy, a decision which isn't made overnight, they could conceivably intentionally overdraft their bank account, take out payday loans, etc, seemingly without consequence...

is there in legal protection against this sort of thing?

(save the opinions about the ethics of this sort of thing, I need a factual legal answer)

state is Idaho if that matters

That would be bankruptcy fraud. It would be instantly detected and the perpetrator would end up in federal prison.

How to Find a Qualified, Reliable Payday Loan Company

Often times, consumers searching for a payday loan company are in a bit of a bind.  They may be behind on their rent, have an unexpected car expense, need to pay their electric bill, or simply cover daily expenses until their next paycheck.

Whatever the reason, a payday loan may be their answer if they are unable to borrow money from other sources.  Unfortunately, because payday loans are taken out in emergency situations, many borrowers do not take the time to research the laws, as well as their options, regarding payday loans.

Finding a Reliable vs. Unethical Payday Loan Company

This is where unscrupulous payday lenders come into play. These companies, many of whom use the title of payday lender to disguise their predatory lender business, rely on the fact that many borrowers simply don’t have the time to research the company ahead of time.

However, it is always in your best interest to research the company and consider all of your options before signing a contract with a payday loan company.

Many of these payday loan scams occur over the Internet; it is therefore critical that you never provide your personal or bank information to any company you have not first checked and verified.

Predatory Warning Signs

Some of the warning signs of an unethical payday lender include:

• The payday lender offers very low rates. In reality, payday loans are generally quite expensive. If you come across a company offering much lower rates than their competition, beware.  This scenario is often too good to be true.

• The payday lender does not have an address or telephone number on their website. If you have no way to contact the company regarding your payday loan, and if the company does not have a physical address or telephone number, you may be out of luck if you were scammed. Many illegal, offshore payday lenders fail to provide this basic company information.

• Beware of payday loan companies that ask for more than basic information. Many shady payday lenders will use personal information, such as your social security number, passport number or credit card number, to steal your identity or drain your bank account.

How to Protect Yourself

There are several strategies you can enact to avoid being scammed by an unscrupulous payday lender:

• Read and reread the terms and conditions of the payday lender’s contract and do not sign it until you fully understand them.

• Contact your state office and educate yourself on the laws regarding payday loan companies. It is important to understand that each state has adopted its own set of laws regarding how payday lending companies operate.

• Never enter into a contract with a company that is based outside of the U.S. Offshore lenders are not regulated by federal and state laws, and they can therefore charge outrageous interest rates and engage in illegal practices without being caught.

• Make sure the payday loan company you choose is licensed by the state and adheres to all federal and state regulations.

• Ensure that the contract clearly outline the loan’s terms and repayment schedule and don’t sign it until the lender includes it in the contract.

There are many ethical, responsible payday loan companies that operate in the United States.  By conducting your research, you can ensure that you only borrow money from the credible ones.

About the Author

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