Are payday loan companies in New York legal? I have several that I cannot pay and they seem too large. What can I do to do? I'm a NY state resident. I got two payday loans on the internet in February. I've already paid hundreds more , and am more than the principal balance. I don’t know what I'll do to pay these loan off. Are you able to offer any advice as to what I should do? Askbill More Show less These small loans, also known as "cash advance loans," "check advance loans," or "deferred deposit check loans" are often a source of financial trouble for people. For a typical loan of $300, a fee between $15 and $30 per $100 borrowed is assessed. If a loan is $300 the borrower is required to present the lender a post-dated, post-dated cheque. The lender will use this to electronically transfer payment or the entire amount of the loan out of the borrower's account. One of the most risky practices is to withdraw small amounts of money from the account to pay for "customer services." The partial payment is then an ongoing installment that will continue despite the borrowers' best efforts to stop it. Because the rates are extremely high and the loan term is very shorter, it's not surprising that loans are often extended by the borrower. This means that the annualized interest rate is 390%-780% APR depending upon the amount of times that the principal was rolled. A funny fact about payday loans is that Wikipedia.org lists payday lending under Loan Shark. According to Wikipedia.org's most popular online encyclopedia, it states that "if loan sharking has high interest rates and a credit program that traps borrowers, then this label is applicable." Quick Tip The law that New York has enacted against payday loans bans debt collectors from attempting to collect from New York residents who have taken out payday loans. The New York State Dept. Financial Services to inform debt collectors in New York that payday loan collection is illegal. You can file a formal complaint with Dept. of Financial Services, if you are a resident of New york and is being approached by a collection agency to request the payday loan. The Federal Trade Commission provides great information about payday loan options. Payday loans and consumer rights A payday lender may try to get the remaining balance. The payday lender could transfer the debt to a collection agency in the event that the borrower defaults. We will go over this in the future. If the payday loan company (or collection agency in this case), cannot convince you of paying through standard collection tactics such as telephone calls or letters to collect, it may sue you in order to recover the balance. If the lender files a lawsuit and wins a judgment against you, it could then proceed to enforce the judgment according to the procedures required by your state law in civil court. Wage garnishment, bank account levies and property liens are the most well-known methods for enforcing judgments. Not included on the list are calls to your employer, calling your neighbors, and getting warrants for arrest. Failure to pay back a loan is a civil offense and not criminal. A typical threat payday lenders use is arrest for check fraud: This is an untrue threat unless the payday loan provider has evidence to prove the borrower didn't intend to repay the payday loan. It is a difficult task to prove that. Remember that nobody within the United States has been imprisoned or held accountable for debts prior to the Civil War. If the payday loan business sells the account to a collection agency then the borrower is legally bound to pay the balance to the collection agent. Editor's note Comments on this page are closed. See Payday Loans to learn how to manage payday loan collections. To learn more about the laws that govern payday loans in these states, visit Bills.com. Federal law, known as the Fair Debt Collections Practices Act or FDCPA (Fair Debt Collections Practices Act) stipulates that third-party collection agents must stop calling you when they are notified in writing. California, New York, Texas and Texas all extend the FDCPA regulations to include initial creditors. If you need advice on how to deal with the collection agency that is that is constantly harassing you, refer to the following advice if you're being harassed by a Collection Agent. If the payday loan company sells the account, the borrower could stop phone calls by sending a cease-communication request letter to the collector. It is also known as a cease-and-desist note. For examples of cease and desist letters, go to the Bills.com Debt Help Center. How can I handle the payday loan collection process? A large number of payday loan lenders employ intimidation to frighten those who are borrowers. It does not necessarily suggest that a person with debt has lost their rights to be a consumer. As previously mentioned payday lenders might ask borrowers to provide their checking account numbers in order to permit automatic withdrawals of borrowers' accounts via the Automated Clearing House. In the event that the borrower's accounts are not able to pay, the payday lender will attempt to pull out funds. The bank could charge overdraft charges to the borrower, and then close the account if it happens frequently enough. The most common method of dealing with payday lenders that repeatedly withdraw funds from a borrower’s account is for the borrower close the account, and then to reopen it in a different bank. If the bank fails to connect all transactions made from the previous account to the new one, it is impossible. If this occurs then the bank can simply transfer funds into the new account and withdraws the funds. It is vital to confirm that your bank doesn't allow electronic withdrawals to be taken through an existing account, and then transferred to a new one. To know more about the rights you have as an New York resident, read the Bills.com article New York Collection Laws. New York Payday Loan New York has several laws against payday loans. The maximum civil usury amount is 16% as per the New York General Obligations Law and SS 5501. New York Penal Law SS 190.40 & 190.40 include 25 percent cap on criminal usury. Check cashers are prohibited under New York law from cashing checks that have deferred dates. In the event that payday loan in new york (kupiti-dveri.ru) lending is prohibited in New York, how do payday lenders operate openly in the state? New York payday lender partners with banks from deregulated states. These lenders offer loans via electronic funds transfers and claim that the local bank is brokering loans. This is called renta-bank lending. The New York City Dept. Consumer Affairs Tips about Payday Loans. This article outlines New York law as well as providing tips on how to avoid payday loans. Check out the New York State Guide to Avoiding Dangerous, or 'Predatoryloans. More Information on Payday Loans Check out the Bills.com article on Debt Negotiation & Resolution Advice to learn more about tactics, strategies, and how to deal efficiently with creditors. Bills.com offers additional information on its Payday Loan Information pages and has responded to questions from readers regarding payday loans in California, Florida and Illinois. Payday loan companies have many legal remedies if you do not pay your payday loan. They can be able to garnish your wages, levy or place a lien to your home. You can learn more about the rights and obligations of creditors as well as debtors at Bills.com. See also the no-cost Bills.com Financial Planning and Budget Guide, that can assist you in managing your finances. You can also learn about budgeting and prudent financial management.