Are New York’s payday loans legal? I have several that I cannot pay and they are too overwhelming. What do I do? I’m a NY state resident. I took out a few online payday loans in February. I have paid hundreds of dollars more than the principal balance. I’m not sure how I’m able to afford to pay for these loans again. Can you give me suggestions for how I can pay for it? askbill show 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. A loan amount of $300 is subject to an interest rate of between $15 and $30 for every $100 borrowed. The borrower will sign a postdated check and give the check to the lender. The lender uses this information to transfer any payments or the entire loan balance from the account of the borrower’s bank. It is possible to take the partial amount of money from your account through « customer Service ». This is an especially perverse procedure. The partial payment could be a permanent installment which continues even if the borrowers attempt to stop the payment. A higher rate and a short-term loan can make it easier for borrowers to roll over loans again and again. The accrued fees could result in an effective annualized rate of interest ranging from 390 percent and 780 percent dependent on the quantity and frequency of principal rolls. One slightly light-hearted fact regarding payday loans is that Wikipedia.org is the most popular online encyclopedia, lists payday lending under Loan Shark, stating that « if the defining characteristics of loan sharking are high interest rates and a product that is a trap for debtors then this label is definitely applicable. » Quick Tip New York law prohibits payday loans. A debt collector cannot take or attempt to take over a New York resident’s payday loan. In February 2013, the governor of New York directed the New York State Dept. of Financial Services to inform debt collectors that any attempt to collect payday loans in New York is illegal. You can file a complaint with the Dept. If you are an New York resident, and an agency for collection attempts to collect on a loan, please call the Department. of Financial Services. The Federal Trade Commission provides great information about payday loan options. Payday loans and consumer rights A payday lender may attempt to collect the debt on its own. The payday lender can transfer the loan to an agent to collect the debt if the borrower fails to pay. If the payday lender (or collection agency in this case), cannot convince you of paying through conventional collection techniques like telephone calls or letters to collect, it may file a suit against you to collect the balance. The lender could sue you and obtain a judgment against your case. The payday lender will then have the authority to make the judgment executable in civil court as provided by law of the state. Wage garnishment and bank account levies are the most commonly used methods to enforce a judgment. Not on the list are calls to your employer, making contact with your neighbors, and getting an arrest warrant. Refusing to pay a debt could be a civil however, it is not a criminal offense. Payday lenders are frequently warned of arrest for fraud involving checks. This is not true, because the payday lender must provide proof that the borrower has no intention of to pay back the loan. It’s very difficult to show otherwise. Also, keep in mind that no one has ever been imprisoned or held in the United States for debt since the Civil War. If a payday loan company acquires an account, the borrower will be bound to repay the balance to the agency that collects the money. Editor’s Note Comments on this page have been deleted. Payday Loans explains how to take payday loans. To learn more about the laws that govern payday loans in these states, go to Bills.com. A federal law referred to as the Fair Debt Collections Practices Act states that third-party collector agents are not allowed to contact you if you inform them in writing. California, New York, Texas and Texas all expand the FDCPA rules to include the original creditors. See Advice If You’re Being Victimized by a Collection Agency to find out what steps you can take if suspect that a collection agent is in violation of the FDCPA. If the payday lending company transfers the account to collection agencies The debtor has the option of stopping the phone calls by delivering cease-and-desist letters, also known as a cease and desist letter to the collection agency. Examples of cease and desist letters are available on the Bills.com Self-help center for debt. How Can I Handle the collection of payday loans? Many payday loan in new york (mosartagency.ru) loan lenders employ intimidation in order to create anxiety among the those who are borrowers. If a person has financial difficulties does not automatically mean that they have lost their rights as consumers. Many payday lenders require borrowers submit their checking account numbers in order to allow automatic withdrawals via the Automated Clearing House. If the borrower account is not able to pay for the loan, the payday lender can continue to withdraw funds. The borrower might be subject to overdraft fees and, when the procedure is repeated repeatedly enough, the bank could shut down the account. The borrower is able to close one account at one bank and then open another to deal with payday lenders that keep withdrawing funds. This works if the bank connects all transactions made in the previous account with the new. If that happens, when the payday lender needs to make withdraws, the bank simply reaches into the new account to take out the funds. This lesson is to make sure that the bank does not allow electronic withdrawals of the previous account to be transferred automatically to the new one. You can learn more about your rights and responsibilities as a New York resident by visiting the Bills.com New York Collection Laws article. New York Payday loan New York has several laws that prohibit payday loans. New York General Obligations Law SSS 5-501 has an annual 16% percentage rate on civil usury. New York Penal Law SS 190.40 & 190.40 include 25 percent cap on criminal usury. Cashing checks is prohibited by New York law from cashing checks with deferred dates. If payday lending is prohibited in New York, how do payday lenders legally operate within the state? Many New York payday lenders have partnered with banks in other states. These lenders make loans using electronic funds transfer. They claim that the local storefront facilitates loans for the bank that exports 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 Dept. Consumer Affairs Tips about Payday Loans. The article explains New York law and provides tips on how you can avoid payday loans. Read the New York State Guide to Avoiding Risky, or ‘Predatoryloans. Get more information regarding payday loans. To find out more about the tactics and strategies for dealing with creditors, check out the Bills.com article on Debt Negotiation and Settlement Advice. Bills.com also provides more information on its Payday Loan Information pages and has answered readers’ questions about payday loan in California, Florida and Illinois. The payday loan provider can seek legal recourse against you if you don’t pay back a payday loan. This includes levies and garnishments on wages and a lien. Find out more about creditors and debtors by visiting the Bills.com resource Collections Advice. Also, check out the no-cost Bills.com Financial Planning and Budget Guide, that will help you manage your finances and you can learn more about budgeting and financial management.