Unpaid payday installment loans can be very stressful for consumers because most collecting agencies make annoying phone calls and demand letters for payment. Online payday installment loans are similar to regular short term loans, but instead of visiting a physical location, borrowers can take out a loan from the internet. Also, instead of providing the online lender with a postdated check, the borrower generally provides a checking account number from which the lender can withdraw money on the scheduled due date.
However, many borrowers are unable to pay on time and some may not even pay at all. Usually, online lenders have stringent collection practices when the borrower has an unpaid debt. A few consumers know that there are statutes of limitations that can be applied to unpaid payday installment loans depending on the laws of the state in which they were issued.
Since most online payday installment loans are issued on the internet, many consumers may not be aware that there are provisions on the statute of limitations for unpaid loans. Although online lenders of payday installment loans are available all over the world, these online lenders are required to have a business license to operate legally. Therefore, an online payday installment loan can be treated identically to a loan that a consumer takes out personally in a physical loan office.
Usually, the state that has jurisdiction over the payday installment loan is the state in which the loan was issued. In many cases, an online loan is issued in the state to where the lender is located. So, for example, if a lender is located in Texas and approved a payday installment loan to a resident of Massachusetts, the loan can be collected as long as the Texas statute of limitations allows the online lender to do so.
First things first, let us first define what a statute of limitation is. Just like other types of debts, payday installment loans have a statute of limitation associated with them. Generally, the statute of limitations is the amount of time that a creditor can sue an indebted consumer for the collection of an unpaid debt. The laws concerning statutes of limitations are usually set by state governments. However, in some cases, the statute of limitations may run for only 2 to 4 years. In other states, the payday installment loan companies can come after you for 15 years to collect your unpaid debt.
In order to determine what the statute of limitations is in your state, you have to determine what kind of debt a payday installment loan is considered to be by your state. In most states, a debt is considered to be a written agreement with a definite payment date. In other states, it may fall under some other categories of debt. But, whatever kind of debt it is, it can still be covered by a statute of limitation. If the debt is within the statute of limitations, you can expect your online lender to use every means available to collect the unpaid loan. But when the statute of limitations has expired, your online lender cannot sue you for your debt anymore. You will still have to pay the debt but online lenders cannot use the court system to threaten you for payment.