Can I Go to Prison for Not Paying My Loan?
Most people taking Instant Cash Loans or long-term loans will have this question in their minds at one point or another.
Most people taking Instant Cash Loans or long-term loans will have this question in their minds at one point or another.
Whether they could go to jail if they are unable to pay off their loan? The simplest answer to this question is a ‘no’. You cannot be sent to jail for failing to pay back your loan. This applies to all types of individual loans and debts, including student loans, personal loans, or credit card debt.
Consequences of Not Paying a Loan
Just because you will not go to jail for an unpaid loan, it doesn’t mean that there are no consequences. You will have to repay the loan one way or the other and there are legal consequences to not paying. Lenders will take action in accordance with the Australian financial laws, based on the following factors:
- The amount owed
- When you stopped making the payments
- Your income
- Your location
- Assets you own
Some of the potential actions that a lender can take against a defaulter are as follows:
- Appointing a collection agency
- Going to court and suing you for the money you owe
- Going to court and getting a judgment leading to garnish your wages or bank account
- Getting a judgment that forces you to make voluntary payments
- Getting a judgment that gets a lien placed against your assets
Your Rights as a Loan Defaulter
As a consumer in Australia, you are protected by a series of laws. You should know about your rights if you find yourself in financial hardship. The laws stipulate no provisions for a person to be sent to prison for failing to pay a loan, except when the debt is in the form of a fine.
Some of your rights are as follows:
- A provision of 30 days to fix a default on a loan
- Getting the disputes related to your loan decided in a free external dispute resolution
- Requesting financial hardship and getting the decision reviewed in external dispute resolution
- Access details about your loan terms and the copies of loan documentation and statements
- Getting access to credit that meets your needs and is affordable
Fair & Reasonable Treatment
According to the Australian Consumer Law and the ASIC Act, you will be treated in a fair and reasonable manner when you are unable to pay a loan. You should expect the following when lenders or debt collectors want to collect a debt from you:
- Getting treated in a fair manner without any form of coercion or harassment
- Being contacted only at reasonable times
- Getting reasonable repayment terms
Whatever type of loan you may have – personal loan, mortgage, fast Cash Loan, or credit card debt. Your rights are protected as a consumer and you can negotiate a settlement plan with your lender under the protection of the law. This allows you to focus on creating a repayment plan with your lender that is most suitable for you.