So you agreed to a payday loan and now the company you chose is constantly trying to subtract money from your bank account. This is a common practice known as continuous payment authority. Payday loan companies, also known as lenders, are not allowed to collect this type of payments from you until they have made every possible attempt to discuss your loan with you, or until you have given them the authority to do so.
Debt Collections: the Ugly Side of Payday Loans
For those living in the U.K., the payday loan company is required to contact you via phone, letter, email or text. If the lender has tried to make contact with you for a minimum of three days without success, their next step is to recover the payment you owe them using continuous payment authority. According to the Office of Fair Trading,payday loan lenders aren’t allowed to recover late payments by continuous payment authority if the customer has insufficient funds in their account, or if such a deduction from the account would leave the customer unable to pay essential living costs.
If you live within the United States, it is highly likely that you gave your lender permission to collect payment on your payday loan via continuous payment authority but this can be revoked by you at any time in one of two ways. You should send a certified letter to your lender to notify them of the changes, or you can ask your bank to revoke any incoming withdraw requests from the company. If you decide to allow the lender continued access to your account, you will need to make sure there is money to cover the scheduled withdrawals or you may be subject to overdraft charges at the bank and additional fees owed to the lender.
How to Deal with Payday Loan Debt Collectors
When you are behind on your payday loan, it can quickly become a stressful situation that leaves you feeling rather harassed and possibly even taken advantage of. Here are some things that you should know when dealing with payday loan debt collectors.
#1 – Speak to your Lender
When you don’t have the money to cover your payday loan, it is tempting to avoid your lender. This is not a good idea. The lender is not allowed to constantly call you every day in an effort to collect your owed payment. However, if you don’t reply or return their calls, they have no knowledge of your financial problems. Your lender will quickly resort to using continuous payment authority, whether or not you have the money to cover the payment in your account. The best solution is to speak with your lender as soon as possible if you don’t have the money to repay your loan.
#2 – Cancel any Continuous Payment Authority
Whether or not you have had problems with your lender’s use of the continuous payment authority, you should contact the bank where your account is located or reach out to your debit/credit card provider to revoke these privileges. Remember to also put your cancellation request in writing and send it directly to the lender as well as your banking institution for proof that your requirements have been made known by all parties in the matter. Additionally, it is recommended that you keep a copy of this request for revocation for your own personal records.
#3 – Any Disputed Funds should be Refunded
Once you have informed your credit card provider or banking institution that you wish to cancel the continuous payment authority given to your lender, they are compelled to resolve any financial dispute stemming from the related withdrawals. However, if these institutions are unwilling to resolve the issue by refunding your account, you should send a formal complaint letter that describes the case and supporting reasons why your money has been wrongfully subtracted. If you feel that your needs are not met, you may need to request an investigation.
#4 – Ask Your Banking Institution to Refund any Extra Fees or Charges
After you have taken all of the steps necessary to cancel the aforementioned continuous payment authority, no further withdrawals should occur. However, if your financial banking institution fails to comply to the request, you should ask for a full refund, including any additional fees or charges that you might have incurred. However, it is important to note that you are still required to pay the money that you originally borrowed through your payday loan.
Understanding Your Rights
While there are some reputable payday loan companies in business today, there are numerous shady lenders who use less than legal tactics to collect on their payday loans. Here are some things that you should know about payday loan debt collectors regarding what they are and are not allowed to do.
Your payday loan lenders are not allowed to threaten or use violence. If this occurs, you should contact the authorities and the Better Business Bureau. Additionally, lenders are not allowed to harass you and make repeated phone calls that are meant to abuse or annoy you. At no time should your payday loan officers use profane or obscene language while trying to collect on your debt.
Unless you give them permission, lenders are not allowed to call you at times that are considered to be inconvenient. Lenders are not allowed to contact you at work unless they know or have any reason to believe that your employer allows you to receiving personal calls.
Remember, the best things that you can do in order to successfully deal with payday loan debt collectors is to stay informed about your rights, remain organized with your payments, and understand the regulations regarding payday loan companies.