Availability of the Internet speeds up the popularity of any operations with money in the world wide web. It is not only about buying goods in virtual stores, but also, for example, about payday loans. It is very easy to get a payday loan: all you need is an ID and an account within a bank.
The Main Issues to Know
Therefore, the major question is: do the agreements through the Internet really have the same legal force as those on paper?
The answer is yes. At least, if we are talking about relations with legal micro-financing institutions. When you get an online loan, your mutual obligations with the lender are fixed in the electronic document. And although you do not put any signature by hand anywhere, this agreement has the same legal force as in a bank. This is guaranteed by the national law on electronic documents.
Therefore, the decision not to pay for online loan is really not an option at all. No cheating is possible. If you see that you do not have funds to repay the loan on time, it is better to immediately contact the agency and discuss possible options together.
Under What Conditions Is the MFI Likely to Go to Court?
A lawsuit is an extreme measure for the cash advance company too. The reasons are the following:
- after three days (optional) from the day when the borrower had to pay in full;
- total debt with interest and penalties is a big amount, and going to court will be beneficial for MFIs (often talking about amounts above 5000 dollars);
- the debtor is 100% a scammer: he/she ignores letters, calls, and visits of representatives of the creditor.
So potential clients must think twice when they consider turning to MFOs because of the fear of lawsuits and proceedings is not baseless. Good news is it’s not a common situation. In fact, for microfinance organization, it is more profitable to sell debt to collectors. But for each loan agreement, the decision is made individually, taking into account:
- the initially borrowed amount,
- the reasons for the delay,
- other circumstances.
That’s why many public organizations and NGOs try to help the clients in default, understanding their problems. They want to create a connection and suggest the best strategy for humane treatment of customers in the course of the process of default. People who are facing such a frustrating situation may certainly be in the very precarious position both in terms of money and mental state. They are extremely fragile inside, they have families in need. Therefore, the responsibility falls on the financial service to treat these individuals with care.
Why are Some MFOs Not Suing?
Most often these are small agencies that do not have their own legal department. Before submitting a lawsuit, it must be prepared and properly written and the party must present serious arguments to the court in order to get a decision in its favor. Hiring a good lawyer for each case is expensive and unprofitable when it comes to a small sum. And often consumer loans are just up to several thousand, which, even with the accrued interest, are not worth much attention.
Online lenders are less likely to go to court than microfinance organizations with real offices. The reason for it is that it is just inconvenient for them to attend the hearings in the city where the debtor lives.