Q:

Can consumers be arrested for defaulting on payday loans?

A:

Quick Answer

The Consumer Financial Protection Bureau reports that no one can be arrested for defaulting on a payday loan. In order to be arrested for non-payment, the creditor must go to court and obtain a judgement against the debtor. If the debtor refuses to appear, an arrest warrant can be issued.

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Full Answer

"Time" notes that some payday loan companies and collection agencies are attempting to have debtors arrested. Creditors can have a debtor arrested by pursuing legal action against the debtor and requesting several court appearances to determine the amount of debt and examine the debtor's finances for repayment. If a debtor fails to appear at a court summons, the judge can issue a warrant for the debtor's arrest. The creditor can also ask for a "body attachment" that forces the debtor to be put in jail until the next hearing or the debtor pays bail that is often equal to the debt incurred plus any additional fees granted by the judgment.

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