Is it legal to get payday loans in New York? I have several I can't pay, and they are too overwhelming. What can you do? I'm a NY state resident. I got two payday loans online in February. I've paid hundreds more , and am well over the principal amount. I'm not sure if I have the money to pay for these loans any longer. What advice can you offer me? Askbill - More Show less These loans are known by the names "cash advance loan", "check advanced loans," and "deferred deposit checks loans", are often an issue for people. A typical loan of $300 is subject to a fee of $15-$30 for every $100 borrowed. The borrower will sign an unpostdated check and present it to the lender. The lender then uses this information to transfer any payments or the total loan amount from the bank account of the borrower. One of the most egregious practices is to remove a partial payment from the account as an "customer service." The partial amount becomes an ongoing installment that is not stopped regardless of the best efforts of the borrowers. With interest rates that high and terms so condensed, it's no wonder that these loans are often repeatedly rolled over by the borrower. Thus, the annualized interest rate for the borrower can range from 390% and 780 APR, contingent on the number of times the principal is being rolled. Wikipedia.org is the largest online dictionary, lists payday loans under Loan Shark. The label refers to payday loans which are subject to excessive interest rates, which can trap debtors and other financial products. Quick Tip New York law prohibits payday loans. The debt collector isn't able to take or attempt to take over the New York resident's payday loan in new york loan. The New York State Dept. of Financial Services to inform debt collectors that any attempt to collect payday loans in New York is illegal. The Dept. of Financial Services if a you are a New York resident and a collection agent tries to take a payday loan from you. The Federal Trade Commission offers great information on payday loan alternatives. Consumer rights and payday loans A payday lender might try to collect the debt. A payday lender could try to recover the balance when the borrower defaults. This is discussed later. If you are unable to convince the payday lender (or collector agency) to pay the balance of the debt, they can file a lawsuit against yourself in order to obtain a judgement. If the lender files a lawsuit against you and obtains a verdict then it will follow the appropriate steps to enforce your state's civil law. Bank account levies are the most commonly used methods to enforce a judgment. Note that not on this list of enforcement actions are making contact with your employer, calling your neighbours, or obtaining warrants for your arrest. Failing to pay a debt is not a crime however it is a civil matter. A typical threat payday lenders use is arrest for check fraud: This is a groundless threat unless the payday lender can provide evidence that proves the borrower didn't intend to repay the payday loan. It's very difficult to show that the contrary is the case. Remember, no one has been detained or arrested for debt in the United States since the Civil War. The borrower is obligated to repay any balance if the payday loan company decides to sell the account to a collection agency. Editor's note This page has been closed to comments. Payday loans explains how to pay off payday loan debts. 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 must cease calling your phone if you inform that they have been informed in writing. California, New York, Texas and Texas extend a number of the regulations under the FDCPA to include original creditors. Consult the Advice section if you are Harassed by a Collection Agency to learn more about what steps you should consider if you suspect that a collection company is violating the FDCPA. If the payday lender decides to sell the account, the debtor could stop phone calls by writing a cease communication request letter to the collector. This is often referred to as a cease and desist letter. (See the Bills.com debt self-help center for sample cease-and-desist letters.) How do you manage the collection of payday loans? Many payday loan collection agents employ intimidation tactics to create the fear of those who are borrowers. A person's situation is not necessarily a sign that they are in financial trouble. is struggling financially doesn't mean they have lost their rights as consumers. A majority of payday lenders require that borrowers submit their checking account numbers in order to allow automatic withdrawals via the Automated Clearing House. The payday lender may keep trying withdrawals even if the borrower's account is not sufficient. This may create overdraft charges for the borrower. Moreover, should it be repeated enough often, the bank may shut down the borrower's account. To deal with payday loan lenders who take the money from borrowers' accounts, one common tactic is for them to close the account and open another in the bank. This only works when all transactions are connected from the previous account to the new bank. In the event of this happening then the bank can simply transfer funds to the new account and withdraws the funds. It is vital to confirm that your bank does not allow electronic withdrawals from an existing account before being transferred to a new one. Find out more about the rights you have as a New York as a resident by studying the Bills.com article New York Collection Laws. New York Payday Loan New York has several laws that ban payday loans. New York General Obligations Law SSS 5-501 places an annual 16% percentage rate on civil usury. The limit for criminal usury is 25percent under New York Penal Law SS 190.40, 190.40. Check cashers are forbidden by New York law from cashing checks that have deferred dates. In the event that payday lending is illegal in New York, how do payday lenders legally operate within the state? New York payday lenders are typically partnered with banks which are not regulated in their home states. They offer loans via electronic money transfer. They claim that the local shopfront facilitates loans for the bank, which exports the state's interest rates as well as other terms from New York. This is known as renting an institution lending. The New York City Dept. The New York City Department. Also, check out the New York State Avoiding Dangerous and Predatory loans. More Information on Payday Loans For more information on strategies and tactics to handle creditors, read the Bills.com article: Debt Negotiation & Settlement Advice. Bills.com provides additional information on the Payday Loan Information section and responds to questions from readers about payday loan lenders across California, Florida. Illinois. Massachusetts. Missouri. Texas. Payday loan companies have a variety of legal remedies if you do not pay the payday loan. They may garnish your wages or levie an obligation to your home. Check out the Bills.com resource Collections Advice to find out more about rights for creditors as well as debtors. The Bills.com Budget Guide as well as the Financial Planning Guide are available for free and are able to manage your finances. It also provides information about budgeting and fiscal management.