What to do about online payday loans that are illegal in my state?
Like an idiot I took out 2 on-line payday loans for $500; one for $200 and the other for $250. I've paid back $500 on the $250 loan and $300 on the $200 loan. In order to pay them in full I'd have to give each of then another $260. I now find out that payday loans are prohibited in PA. I'm not in default, but I can't do this any more. I'm getting behind on rent, electric and cable. What are my legal options here?
First of all, you must check that the loans you have are in fact illegal; just because something is called a "payday loan" doesn't automatically make it so. What is illegal are loans that are for too high of an interest rate under your state law or that have certain other characteristics that make them "predatory" (deceptive or outright fraudulent). Since you don't describe what your loan is like (interest rate, term, etc), it's impossible to tell whether your loan is legal or not (although it sounds as though it might be). In most jurisdictions the general rule is that you must pay back what you borrowed, plus legal interest (as determined under the laws of your state). Note, however, that if the loan is illegal you should be able to recover any "excess" interest paid (that is interest over an above the legal interest rate).
You are at the point where you need to contact these "lenders". Make it clear to them (in writing) what you will pay. Expect nasty and intimidating phone calls that threaten you with illegal nonsense. Just stand your ground and don't be intimidated. Some payday lenders will turn you over to third party collection agency. If that happens, send the collector a "debt validation letter" asking them to prove that the debt is yours. For example, how did they determine the amount they claim that you owe? Also, ask whether or not the lender that made you the loan is licensed in your state (if an internetpayday lender is illegal in your state they will not have the power to collect there and they know it). Most of the time you will not hear from them again.
If you are being harassed or intimidated send the lender/collector a certifiedletter telling them to stop all communication with you. And do not hesitate to file complaints with the Better Business Bureau, the Attorney General in your state, the state where they are located, and the FTC.