Payday advance loans provide borrowers with a small loan, unsecured by any property, until their next payday. The Ohio Department of Commerce regulates payday loan businesses and how much interest and fees payday lenders may charge. In the state of Ohio, borrowers may choose to defer their payday loan for a period of up to six months. If they default after that time, a payday lender may pursue collection and legal action against the borrower.
Restrictions
All payday lenders must receive a license from the Ohio Department of Commerce in order to legally issue payday loans. The licensing process involves a $500 application fee and a rigorous screening process according to Payday Loan Laws. Per Section 1321.02 of the Ohio Revised Code (ORC) any payday lender not licensed in the state, such as an online vendor, cannot legally collect on a loan default as the state considers the transaction null and void. Per 1321.13 of the ORC, lenders may not charge a borrower more than 28 percent in interest fees per annum on a payday loan, or the state considers the loan null and void. In addition, the lender must pay back to the borrower double the interest charged.
Fees
Per 1321.16(c3) of the ORC, a payday lender may charge a default charge on any amount owed on a payday loan that the borrower has not paid 10 days after the due date. The payday lender can only charge the lesser of five dollars or five percent of the loan value. Borrowers may come up with a repayment plan as long as the loan is paid within 31 days of the due date, during which period the payday lender may not charge additional interest.
Collection
The payday lender can legally attempt to collect a loan themselves, or they can sell the debt to a collections agency. Section 1321.45 of the ORC requires debt collectors to identify themselves and to only contact the borrower, not his friends, family or employer. Debt collectors cannot send postcards or envelopes that indicate that the mail is intended to collect a debt. Per 1321.45(c1) of the ORC, a payday lender can only call a delinquent borrower during 8 AM and 9PM and cannot harass a debtor over the telephone. Delinquent debtors may cease all communication with a lender by sending to the lender written notice that they do not wish to be contacted in the future.
Legal Action
A payday lender can attempt to collect a payday loan in default via the Ohio court system. A judge may decide against the borrower and award the owed monies with penalties to the payday lender. The judgment can include a garnishing of a debtor's paychecks or placing a lien on his house. In addition, Section 1321.40(c) of the ORC allows a lender to collect legal fees and processing fees associated with taking a delinquent payday loan borrower to court.
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