New Jersey has few laws that limit the amount of interest or fees that lenders charge borrowers when taking out a payday loan. This increases the chance that a individual in New Jersey will rack up hefty penalty fees on a loan if he doesn't pay it back on time. If you are delinquent in paying a payday lender back his loan, then you can be sued for collection of the debt.
Payday Loan
When a person takes out a payday loan in New Jersey, the company lending him the money will typically require that he first sign a written contract in which he pledges to pay back the money within a certain period of time. This contract is legally binding. If the borrower violates its terms, then the payday loan company can sue him for damages stemming from this breach of contract.
Lawsuit
New Jersey allows lenders to sue in court for violating the terms of a loan contract. The lender will typically seek the amount of money that the contract entitles him, too. This lawsuit will be filed in civil court and heard by a judge. The judge will then render a decision as to whether the individual being sued is in fact liable for the money he is being asked to pay.
New Jersey Statute of Limitations
A debt collector cannot sue for the collection of an unpaid debt in New Jersey if the debt has been written off for more than six years. This is because the state has a statute of limitations on debts that stem from written contracts. After six years, the debtor still legally owes the money to the payday loan lender, but the lender has few methods of collecting the money owed him.
Considerations
While you can be sued in New Jersey for failing to repay a payday loan, this does not mean that you will. Filing a lawsuit is expensive and a payday loan lender may determine that it costs more to file a lawsuit than he stands to collect, particularly if the debt is relatively small. However, as the debt grows in size through interest and fees, the chances of a lawsuit increase.
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