Are payday loans in New York legal? I have several I cannot pay back and they are taking over my life. What can I do? I'm a NY state resident. I borrowed several payday loans online in February. I've had to pay hundreds of dollars more than the principal balance. I'm not sure what I can't afford to pay for these loans any longer. Are you able to offer any recommendations for me to follow? Askbill Show More Show more These small loans, also called "cash advance loans," "check advance loans," or "deferred deposit check loans" are a frequent pitfall for customers. If a loan is of $300, a fee of between $15 and $30 per $100 borrowed will be paid. The borrower signs a postdated check and give it to the lender. The lender will then use the information to transfer any payment or the total loan amount from the account of the borrower's bank. One of the most risky ways to avoid this is to remove part of the funds from the account in order to provide "customer services." This is an ongoing installment which will continue regardless of efforts made by customers to stop it. Because the rates are high and the term is shorter, it's not unusual that these loans are frequently repeated by the borrower. This means that the annualized rate of interest is 390%-780% APR depending upon the number of times the principal was transferred. Payday loans are a lighthearted subject. Wikipedia.org, the largest online encyclopedia, has payday lending listed under Loan Shark. It states that "if the defining characteristics for loan sharking are high interest rates and credit products that traps debtors," then the label is most definitely appropriate. Quick Tip New York law prohibits payday loans. A debt collector cannot collect or attempt to collect on the New York resident's payday loan. The New York State Dept. Financial Services to notify debt collectors that New York law prohibits the collection of payday loans. The Dept. If you are a New York resident, and a collection agency attempts to recover a loan, please contact the Dept. of Financial Services. The Federal Trade Commission has an excellent webpage on the internet about payday loans. Consumer Rights and payday loan in new york (http://mosartagency.ru/) Loans The payday lender might try to recover the remaining balance. If the borrower is in default the payday lender could sell the balance to a collection agent that we will discuss in the future. If you are unable to convince the payday loaner (or collection agency) to pay off the remainder of the debt, they can file a lawsuit against yourself in order to obtain a judgement. If the lender files a lawsuit and gets a judgement against you, the lender could then take steps to enforce the judgment in accordance with the rules permitted by the law of your state before a civil court. Bank account levies and property lien are among the most common methods of enforcing judgments. It is important to note that not included in this list of enforcement actions are making contact with your employer, calling your neighbors, or obtaining a warrant for your arrest. Refusing to pay a debt is a civil issue and is not considered a crime. Payday lenders frequently make use of threats of arrest to deter check fraud. This threat isn't valid if the payday lender is not able to prove that the borrower was planning to pay back the loan. It's extremely difficult to prove that the contrary is the case. It is crucial to keep in mind that no one has ever been imprisoned or arrested within the United States for any debt since the time of the Civil War. If a payday lending company purchases an account, the borrower will be required to pay the balance back to the collection agency. Editor's Note Comments on this webpage are no longer accepted. Payday Loans provides detailed information about how to get payday loans. Check out the Bills.com payday loan sources to California, Florida, Illinois, Massachusetts, Missouri, New York, Texas, and Virginia to know more about the laws governing payday loans in those states. A federal law known as the Fair Debt Collections Practices Act (FDCPA) stipulates that a third party collection agent must stop calling you when you notify them in writing that you wish to do so. A lot of FDCPA regulations are extended to the original creditors in several states, like Texas, California, New York and New York. If you need advice on how to respond to the collection agency that is who is harassing you, read Advice if You're being Harassed by a Collection Agent. If the payday loan company sells the account, the debtor may stop telephone calls by writing a cease communications request letter to the collector. This is commonly known as a cease and desist note. A sample cease and desist letter can be found at the Bills.com Self-help center for debt. How do you deal with payday loan collection The payday loan collection companies often employ intimidation to scare the borrowers. It doesn't necessarily mean that someone who is in debt has lost their right to be an individual consumer. As we've already discussed that many payday lenders require the borrower to provide their checking account numbers to allow payments to be made automatically out of borrowers accounts by using the Automated Clearing House. The payday lender will try to withdraw funds even if there aren't enough funds in the borrower's accounts. The borrower might be subject to fees for overdrafts and, if the practice is repeated often enough, the bank could close the account. An effective method to deal payday lenders that frequently remove funds from a borrower's account is for the borrower close the account, and then reopen it at another bank. This will only work in the event that the bank is able to link all transactions from both accounts to the new account. If that happens it checks the new account for the funds to be withdrawn by the payday lender. It is vital to confirm that your bank doesn't allow electronic withdrawals to be made from an existing account and transferred to a different one. The Bills.com article New York Collection Laws explains your rights as New Yorker. New York Payday Loan New York has several laws against payday loans. Under New York General Obligations Law 5501, the civil usury cap is 16 percent APR. According to New York Penal Law SS 190.40 and 190.40 the criminal usury cap is 25 percent APR. Check cashers are forbidden by New York law from cashing checks that have deferred dates. If payday lending is illegal in New York, how do payday lenders function legally within the state? New York payday lender partners with banks from deregulated states. They make loans through electronic funds transfer. They claim that the local storefront is brokering loans for the bank that is exporting the state's interest rates as well as other terms to New York. This is referred to as rent-a bank lending. The New York City Department. of Consumer Affairs Tips about Payday Loans outlines New York law, and provides suggestions on how to avoid payday loans. Also see New York State's Guide to Avoiding Predatory or dangerous loan lending. More Payday Loan Information You can read more about tactics and strategies to deal with creditors in Bills.com's article Debt Negotiation and Settlement Advice. Bills.com provides additional information in the Payday Loan Information section and answers readers questions about payday lenders in California, Florida. Illinois. Massachusetts. Missouri. Texas. The payday loan company can take legal action against you if you fail to pay the loan off. This can include the possibility of wage garnishment or levy and a lien. See the Bills.com website Collections Advice to learn more about the rights of creditors and debtors. You can also find the Bills.com Financial Planning and Budget Guide at free. This guide will aid you in managing your finances and educate the basics of financial planning and responsible financial management.