Are payday loans in New York legal? I'm in the process of obtaining several loans that I cannot pay and are weighing me down. What can I do? I'm a NY state resident. I borrowed money on the internet for payday loans. The principal amount of both loans was paid off in February. I'm not sure if have the money to pay for these loans any longer. Are you able to offer any suggestions on what to do next? Askbill - More Show less The average consumer is often frightened by these loans. They are also described as "cash advanced loans,"" "check advances," or "deferred-deposit check loans." For a typical loan of $300, a cost between $15 and $30 for each $100 borrowed will be charged. The borrower must provide a post-dated copy of their check to the lender. The lender is then able to electronically transfer a payment or the entire remaining balance of the loan from the borrower’s account. As a service to customers, a partial payment can be taken out of the account. This is especially risky. This partial payment is a permanent installment and continues regardless of the borrower's best efforts to stop it. With interest rates that high and the terms so condensed, it's no wonder that loans are frequently repeated by the lender. Thus the annualized interest rate for the borrower ranges from 390%-780% APR, depending on the number times that the principal is transferred. Wikipedia.org the world's biggest online Encyclopedia includes payday loans under Loan Shark. The label refers to payday loans that are subject to high interest rates, trapping customers in debt and other financial products. Quick Tip New York law makes payday loans illegal. The debt collectors are not authorized to collect any New York resident's payday loan. In February 2013, New York's governor directed the New York State Dept. The New York State Department of Financial Services informed debt collectors that it was illegal to collect payday loans in New York. You can file a formal complaint with the Dept. If you are New Yorker and a collection agency tries to collect a payday loan from you, you can file a complaint with the Department. The Federal Trade Commission has a amazing website about payday loans. Payday loans and consumer rights A payday lender could try to collect the whole balance. If the borrower fails to pay, the payday lender may sell the debt to a collection agent, which we discuss later. If the payday lender (or collection agency, in this case) can't get you to pay the debt through traditional collection methods like telephone calls or letters in the event of a dispute, the payday lender might decide to file an action against you in order to obtain a judgment for the balance of the due. If the lender sues and gets a judgement against you, it can follow up to enforce the judgment in accordance with the rules permitted by the law of your state before a civil court. Bank account levies and property liens are the most well-known ways to enforce judgments. It is important to note that not included in this list of actions to enforce your rights are reaching out to your employer, contacting your neighbors, or getting warrants for your arrest. In the event of a debt not being paid, it is not a crime and is instead a civil issue. Payday lenders are often threatened with arrest for fraud on checks. This is not true, because the payday loan in new york (http://bars-karate.ru/html/10_10.htm) lender must provide proof that the borrower never intended to pay back the loan. It isn't easy to prove. It is important to remember that no one has been detained or imprisoned in the United States for any debt since the time of the Civil War. If the payday loan business sells its account to a collection agency and the borrower becomes required to pay back the balance to the collection agent. Editor's Note This page is not open for comments. Check out Payday Loans for information on how to handle payday loan collection. To find out more about the laws governing payday loans in these states, visit Bills.com. Federal law, known as the Fair Debt Collections Practices Act or FDCPA (Fair Debt Collections Practices Act) stipulates that third-party collection agents should stop calling you once they are notified in writing. California, New York, Texas and Texas all expand the FDCPA rules to include the original creditors. Refer to Advice If the Collection Agent Hurts You for information on what steps you should take if you believe that a collection agency is in violation of the FDCPA. The debtor can make a cease and desist letter to the collection agency if the payday loan company decides to sell the account. (See the Bills.com debt self-help center for sample cease-and-desist letters.) How do I manage payday loan collection? Many payday loan collection companies employ intimidation tactics to create anxiety in the those who are borrowers. Even though a person may be in debt, it doesn't mean that the person is deprived of their rights as a consumer. As stated above, many payday lenders require that borrowers provide their checking account numbers to ensure that the payments can be withdrawn from the borrowers' accounts automatically using the Automated Clearing House (ACH). The payday lender can keep trying withdrawals even in the event that the account of the borrower is not sufficient. The bank could charge overdraft fees to the borrower and shut the account if it happens frequently enough. The borrower is able to close one account at one bank and reopen the other to deal with payday lenders that keep withdrawing funds. If the bank fails to link all transactions of the old account with the new one, it is not feasible. In this case, the bank can simply access the new account to take out the funds. This is why it is important to ensure that the bank does not allow withdrawals via electronic means from an old account to be transferred automatically to the new account. The Bills.com article New York Collection Laws explains your rights as New Yorker. New York Payday Loan New York has several laws which ban payday loans. In the New York General Obligations Law 5501, the civil usury cap is 16 percent APR. In New York Penal Law SS 190.40 and 190.40 the criminal usury cap is 25% APR. New York law prohibits check-cashing employees from cashing checks with deferred dates. Payday lending is illegal in New York. How can payday lenders legally be operating in New York? New York payday lenders are frequently partnered with banks that are not licensed in their home states. These lenders offer loans via electronic funds transfers and claim that the local bank is brokering loans. This is referred to as rent-a-bank borrowing. The New York City Department. The New York City Department. Also see New York State's Avoiding dangerous loans or 'predatory' Lending. Additional Information on Payday Loans For more information about strategies and tactics to negotiate with creditors, read the Bills.com article: Debt Negotiation & Settlement Advice. Bills.com provides additional information on its Payday Loan Information Page and answers reader questions regarding payday loans. Payday loan companies have several legal options should you do not pay off your payday loan. They can take action such as the possibility of garnishing your wages, a lien and levy. You can learn more about the rights and obligations of creditors as well as debtors at Bills.com. There is also the Bills.com Financial Planning and Budget Guide at free. This guide can assist you in managing your finances and teach the basics of financial planning and responsible financial management.