Are New York payday loans legal? I'm in the middle of several loans I can't pay back. How can I help? I'm a NY state resident. I took out several Internet payday loans in February. They have been paid off far beyond the principal amount. I don't know if I can afford these loans anymore. Do you have any suggestions regarding what I can do next? Askbill Show More Show less These small loans, also known as "cash advance loans,"" "check advance loans," or "deferred deposit check loans" are a common occurrence for customers. A typical loan of $300 will cost you $15-30 per $100 you borrow. A post-dated check will be presented to the lender by the borrower. The check is later used by the lender to transfer the money or the whole amount of the loan from the borrower's account. One of the most risky ways to avoid this is to remove part of the funds from the account in order to provide "customer services." This is a perpetual installment and persists regardless of the borrower's best efforts to stop it. With interest rates that high and terms so short, it's no surprise that loans are typically rolled over again and again by the borrower. So, the annualized interest rate for the borrower is between 390%-780% APR, depending on the number times that the principal is transferred. One fun fact about payday loans: Wikipedia.org is the most viewed online Encyclopedia. It lists payday loans under Loan Shark. This means that "if the high rates of interest present and a product that entices debtors are the main factors that make loan-sharking illegal", then the label definitely applies. Quick Tip New York laws prohibit payday loans. Debt collectors cannot collect from New York residents a payday loan. In February 2013 the governor of New York directed the New York State Dept. Financial Services to inform creditors that the law in New York prohibits the collection of payday loans. Register a complaint at the Department. If you're a New York resident, and an agency for collection attempts to collect on a loan, you should call the Department. of Financial Services. The Federal Trade Commission has a amazing website about payday loans. Consumer rights and payday loans The payday lender might try to get the remaining balance. The payday lender could try to recover the balance due to the borrower if they do not pay. We'll discuss this further. If the payday collector or lender is unable to convince you to pay through the standard collection methods, such as phone calls or letters and letters, the payday loaner could start a lawsuit to seek a judgment on the remaining balance. The lender could sue you and get an order against you. It then has the right to apply the judgment in civil court, as allowed by law of the state. Bank account levies, and property liens are the most well-known methods for enforcing judgments. The list is not inclusive of making contact with your employer or your neighbors. Also, you cannot get an arrest warrant. Paying off a debt is a civil matter, not a criminal matter. Arrest for check fraud is a common threat that payday lenders employ. But, if a payday lender can prove that the borrower did not intend to repay the payday loan, this is a criminal offense. It's difficult to demonstrate this. It is important to remember that no one in the United States has been imprisoned or held for debt since before the Civil War. If a payday lender decides to sell the account to collection agencies the borrower is required to pay the remaining balance to them. Editor's note Comments on this page are closed. Payday loans offers information on how to get payday loan collection. For more information on payday loan laws for the states of California, Florida and Illinois, Massachusetts, Missouri (New York), Texas, Virginia, and Massachusetts Please visit Bills.com. A federal law referred to as the Fair Debt Collections Practices Act (FDCPA) states that a third party collection agent is required to stop calling you if you notify them in writing that you wish to do so. A lot of FDCPA regulations are extended to original creditors of several states such as Texas, California, New York and New York. For more information about the steps you should take when you suspect a collection agency is violating the FDCPA, please see Advice When You're Being Harassed By a Collection Agent. If the payday lending company transfers the account to collection agents The debtor has the option of putting an end to calls by sending cease-and-desist letters which is also known as cease and desist notice to the collection agency. (See the Bills.com Debt Self-Help Centre for samples of cease-and–desist letters. What can I do to manage payday loan collections? Collection agencies for payday loans often employ intimidation to frighten customers. Even though a person may be in debt does not mean that the person is deprived of their rights as a consumer. Payday lenders often require customers to provide their checking account numbers to take payments out of their accounts through Automated Clearing House. Payday lenders attempt to take money from borrower accounts that are not in sufficient funds. The lender could charge overdraft charges to the borrower, and then close the account if this happens enough. Payday lenders who withdraw funds from accounts of borrowers often are addressed by the borrower shutting the account and opening another one at the same bank. This is only possible when the transactions tied from the old account to the new one by the bank. In the event of this happening, the bank simply goes into the new account and withdraws the funds. This lesson is to make sure that the bank doesn't allow electronic withdrawals of the previous account to be automatically transferred to the new one. For more details about your rights as an New York resident read the Bills.com article New York Collection Laws. Payday Loan in New York New York has several laws that prohibit payday loans. New York General Obligations Law Section 5-501 defines the civil usury rate at 16%. The criminal usury limit is 25% under New York Penal Law SS 190.40, 190.40. New York law bars check cashers from deferred-date cashing. What is the procedure for payday lenders in New York operate legally if payday lending is not legal? Certain New York payday lenders partnering with banks located in deregulated states. These lenders deliver loans via electronic funds transfer, and claim that the local storefront broker loans for the bank that is exporting its state-specific interest rates and other terms to New York. This is referred to as renting the bank lends. The New York City Dept. of Consumer Affairs Tips about Payday Loans provides a detailed explanation of New York law, and gives suggestions on how you can avoid payday loans. The New York State Avoiding Dangerous and 'Predatory loans. More Information on Payday Loans Learn more about strategies and tactics to deal with creditors at Bills.com's article on Debt Negotiation and Settlement Advice. Bills.com has additional details on their Payday Loan Information page. They also answer reader questions concerning payday loans in California and Florida, Illinois, Massachusetts and Missouri. Payday loan companies have a variety of legal options if you do not pay your payday loan. They can take your wages as a garnishment or levie an obligation to your home. For more information on the rights of creditors and debtors, check out the Bills.com source Collections Advice. The Bills.com Budget Guide and the Financial Planning Guide are free and can be used to help you manage your finances. It also provides information about budgeting and prudent fiscal management.