What Will Happen If I Fail To Pay Off My Payday Loan On Time?


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I am sorry to bother, but I’m struggling now to repay my loan on time, and I am not sure where to start from in order not to get deeper in debt than I am already am. What will happen if I fail to pay off my payday loan? Is there a way to avoid serious consequences?
– Rebecca


The Answer

Imagine your car broke down, and you needed to borrow $200 from a payday lender to get it fixed. You thought you would be able to pay the loan off in time, but your landlord raises your rent. You now have no idea how you can pay it off at all, let alone on time.

You might think, “It’s just $200. Are they going to bother coming after me for such a small amount?”

The Logic Behind Lender’s Actions

While $200 may not seem like a lot of money for a lender, you may be surprised by the lengths many payday lenders are willing to go to collect.

To put some perspective on this, consider the fact that stealing $400 or an item valued at that amount is deemed to be grand theft.

So $200 is not considered a trivial amount of money. Nor is $100, or any other amount. Payday lenders are in the business of making small loans. If they allowed their customers to walk away without paying, all of those small loans would add up fast.

So What Might a Payday Lender Do To Try And Collect From You?

  • If you agreed to let the lender make automatic withdrawals, they would first attempt to take the money right out of your bank account—whether it is there or not.
  • The lender may send you letters or call you demanding payment.
  • Lawyers may contact you on behalf of the lender.
  • If you provided references when you applied for the loan, the lender might write or call them as well in an attempt to track you down.
  • You may be taken to court (see below), which could result in even more aggressive efforts to collect the debt.
  • The bill could be sent to collections.

Can You Go To Jail Or Prison If You Fail To Pay Back a Payday Loan?

No. But there is a chance that the lender will take you to court. To do this, they will search for a loophole through which they can claim you have committed a criminal act.

If this happens to you, you must show up. You should also immediately get in touch with your attorney general to seek advice.

How to Behave in Court

Failure to appear in court means that you lose the case automatically. At that point, the court itself will come after you for the money. The court may try to take the money right out of your bank account. If that does not work, they may garnish your wages or put a lien against your property.

This is why it is vital to do your best to pay your loan back on time and in full. If you cannot, talk to a credit counselor or a legal aid attorney for advice on your options.

Reviewed by: Casey Bond
Date Reviewed: Mar 22, 2019


SDL365 Works with Lenders That are Members of Online Lenders Alliance
The answer on this page is provided in collaboration with some of our trusted lenders who are proud members of the Online Lender’s Alliance. The purpose of the provided answers is to inform the consumers about the specifics of online lending. It should not be treated as legal advice or regulatory guidance. The information is updated periodically and may include links or references to third-party resources or content. SDL365 does not endorse any third-party nor does it guarantee the accuracy of the third-party information. We encourage you to consult other resources that might serve your needs and take into account your particular situation.

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