How to Deal With the Consequences of Not Paying Payday Loans

The interest rates on payday loans can be high, and it you may find it difficult to meet your obligation on due dates. There are consequences if you don't pay in a timely manner, but you can get around them by being proactive.

Instructions

1. Remember that you hold some leverage. You already have the lender's money. Call the loan company and attempt to negotiate alternative repayment arrangements if you can't pay as initially agreed. The company wants its capital back and may be willing to work with you rather than pay the cost of forced collection or risk your declaring bankruptcy.

2. Know your rights. Review the Fair Debt Collection Practices Act (see Resources). Restrictions on debt collectors include a requirement to provide you with 30 days notice if they plan to file a lawsuit against you, so that you have an opportunity to pay the debt. By law, debt collectors can't hound you over the phone if you tell them to stop calling.

3. Show up for any court appearances if the loan company sues you. If you fail to appear in court, the loan company will automatically receive a judgment against you, which negatively effects your credit score and allows them to take funds from your pay check or bank account.

4. Keep up with any new payment arrangements you make with the loan company. If you fail to pay, the company can proceed with a lawsuit or, if they already have a judgment, can start collecting the money owed by other means (such as a garnishment of your wages).

5. Consult with a bankruptcy attorney if the debt is just one among many that you are having difficulty paying. A bankruptcy attorney will advise you of the best avenues to take to erase the debts, which may include filing for bankruptcy. Consultations are typically free.

Resources

• Review the FDCPA provided by the Federal Trade Commission.