Though ohio laws on payday loans have changed over the year, one thing remains clear: payday loans seem like a simple solution, but they are very costly and hard to get out of. Whenever possible, avoid them. If you already have them, it’s essential to know your rights.
How do payday loans work?
The traditional style of payday loan involves a consumer writing a check to a lender for the amount owed plus a fee. Most are short-term loans of only two weeks. The individual is expected to repay the loan on time. Usually the day he or she has received a payment from an employer. It sounds simple – borrow $300, pay back $330 in two weeks. However, this amounts to some 260 percent APR (annual percent rate), and it tends to be difficult to make such a large payment.
Lenders often have a number of threats for individuals. They may say they are calling the police if you fail to make payment. They may state you will go to jail if you do not make payment. Some threaten to contact your friends and relatives to tell them about your debt. Some may contact you directly at your place of employment.
Know your rights
In 2008, ohio passed the short-term lender law , or STLA. This law provides specific guidelines about payday loans and other short-term lending in the state. Here’s a breakdown of the law:
- Lenders cannot provide short-term loans over the phone, online or through mail.
- It caps the interest rate at 28 percent APR.
- The loan duration cannot be less than 31 days.
- The amount borrowed is capped at $500.
- Borrowers cannot obtain a loan for more than 25 percent of their gross salary.
The laws also provide you with protection from harassment. Individuals who operate and provide such loans cannot make false claims. They cannot state they are from the FBI or that they are calling the police. They also cannot threaten you in any other manner. If this occurs, speak to the police and then call an experienced payday loan attorney.
Are you facing harassing calls?
A common threat used by payday loan lenders is that an individual is going to go to jail for not paying back what is owed. It is possible that the lender can file a lawsuit against you, get a judgment against you in a court of law, ask the court to seize assets in some way, and legally peruse the debt. However, they cannot threaten you with jail time or other claims.
Some may claim that you are “writing a bad check” when receiving a payday loan and that this is illegal. It is illegal to write a bad check. However, it is only illegal if you know that you will not have the funds available in your account when you write that check. If you will have enough in your account on that day – by all expectations – you are not writing a bad check.
What are your options?
Payday loans continue to be very complex, and the laws continue to change in ohio. It may be possible to get some help with these loans when you file for bankruptcy . Depending on the circumstances, you may not be able to have these loans discharged like you would other debt, but you may have options for making the debt easier to repay.
Do not put off getting legal help in a matter like this. You cannot go to jail for not paying your loans back on time in most situations. The federal trade commission also provides information about what steps you can take to report these illegal threats.