Are the New York payday loans legal? I have a lot of loans that I can't pay back that are overwhelming. What can you do? I'm a NY state resident. I took out online loans for payday loans. The principal amounts of both loans were paid in February. I don't know if I could afford the loans anymore. What suggestions can you offer me? Askbill - More Show less Many consumers are enticed by these loans that are known as "cash advance loans", "check advance loans" or "deferred checks for deposits". On average, $300 loans come with a $15-$30 fee for each $100 borrowed. For a loan of $300 the borrower has to give the lender a post-dated check. The lender will then use this to transfer the payment electronically or the entire amount the loan to the borrower's account. In the course of customer service is provided, a partial payment may be taken from the account. This is especially risky. This is a perpetual installment and persists regardless of the borrower's attempts to stop it. A higher interest rate and short-term loan make it easy for the borrower to roll over loans again and again. The accumulated fees can result in an effective annualized interest of between 390% and 780% dependent on the quantity and frequency of principal rollovers. One fun fact about payday loans: Wikipedia.org is the most popular online encyclopedia. It lists payday loans under Loan Shark. This means that "if the high rates of interest involved and a credit product that traps debtors is the most important features that make loan sharking illegal" The label definitely applies. Quick Tip New York's law against payday loans prevents debt collectors from trying to collect on any New York residents who have taken out a payday loan. The New York State Dept. Financial Services to inform creditors that the law in New York prohibits the collection of payday loans. Register a complaint at the Department. If you're New Yorker and a collection agency attempts to collect payday loans from you, you may complain to the Department. The Federal Trade Commission has a excellent website on payday loan options. Consumer rights and payday loans A payday loan in new york (a8audi.ru) lender may try to collect the amount. The payday lender could sell the loan to an agent for collection in the event that the borrower defaults. If you're not able to convince the payday lender (or collector agency) to settle the remaining balance of your debt, they may bring a lawsuit against you to obtain a judgment. The lender could sue you and obtain the judgment in your case. The lender then has the power to enforce the judgment in civil court as provided by state law. Wage garnishment is one of the most commonly used method to enforce any judgment. It is important to note that not included in this list of enforcement actions is making contact with your employer, calling your neighbours, or getting a warrant for your arrest. Failing to pay a debt is not a crime however it is a civil matter. Payday lenders are frequently warned of arrest for check-fraud. This is not true, since the payday lender has to provide proof that the borrower did not intend on to repay the loan. It is extremely difficult to establish otherwise. It is important to be aware that no one has been held or imprisoned in the United States for debt since the time of the Civil War. The borrower must repay any balance if the payday loan company decides to sell the account to a collection agency. Editor's note Comments on this page have been removed. Check out Payday Loans for information on how to manage payday loan collections. To find out more about the laws governing payday loans in these states, go to Bills.com. A federal law called the Fair Debt Collections Practices Act (FDCPA) states that a third party collection agency must cease calling you if you notify them in writing that you wish to cease calling. California, New York, Texas and Texas all expand the FDCPA regulations to cover original creditors. Read the article if you're Harassed or Accused by a Collector Agent to find out the steps you should take in the event that a collector agent is violating FDCPA. If the payday loan company sells the account to collection agencies, the debtor has the option of stopping calls by sending a cease request letter, also known as a cease & desist notice to the collection agency. (See the Bills.com debt self-help center for sample cease-and-desist letters.) How do I deal with Payday Loan Collections? To intimidate the borrowers, many payday loan companies resort to intimidation. Even though a person may be in debt does not mean that they lose their rights as a consumer. Many payday lenders require borrowers provide their checking account numbers to enable automatic withdrawals via the Automated Clearing House. Payday lenders may attempt to take money from the accounts of borrower who aren't in the right amount. Overdraft charges may be incurred by the borrower. If this happens frequently enough, the bank might shut down the borrower's account. Payday lenders who withdraw funds from the accounts of the borrower repeatedly are often addressed by the borrower shutting the account, and then opening another one with the same bank. This tactic is only effective in the event that the bank connects every transaction between the two accounts. If that happens it checks the account in question for the money to be withdrawn from the payday loan company. This lesson is to be sure that the bank doesn't allow electronic withdrawals of the old account to automatically transfer to the new one. To learn more about the rights you have as an New York resident, read the Bills.com article New York Collection Laws. Payday Loans in New York New York has several laws against payday loans. New York General Obligations Law Section 5-501 regulates the rate of civil usury at 16%. New York Penal Law SS 190.40 & 190.40 places a 25% APR limit on criminal usury. New York law forbids check cashers to cash checks using dates that are deferred. Payday lending is illegal in New York. How can payday lenders legally operate within New York? Some New York payday lenders partnering with banks operating in deregulated states. These lenders make loans using electronic money transfer. They say that the local storefront is brokering loans for the bank, which is exporting the interest rates of its state and other terms to New York. This is known as renting the bank lends. The New York City Dept. Consumer Affairs Tips about Payday Loans. The article explains New York law and provides guidelines on how to avoid payday loans. The New York State Prevention of Predatory or Dangerous Loans is also available. More Information about Payday Loans You can read more about strategies and tactics to deal with creditors at Bills.com's article Debt Negotiation and Settlement Advice. Bills.com provides additional information on the Payday Loan Information section and answers readers questions about payday loan lenders in California, Florida. Illinois. Massachusetts. Missouri. Texas. The payday loan company can pursue legal recourses against you if you fail to pay off a payday loan. This could include levies and garnishments on wages as well as a lien. Learn more about creditors as well as debtors by visiting the Bills.com resource Collections Advice. The Bills.com Budget Guide as well as the Financial Planning Guide are available for free and are able to manage your financial situation. Additionally, you can learn about budgeting and prudent fiscal management.