There are several things you can expect to happen if you fail to repay a payday loan on time.
- Bank Withdrawals: If you’ve given lenders access to your bank account, they will immediately initiate automatic withdrawals until the debt is repaid. Charges may be broken into smaller amounts to collect whatever money is in your account.
- Collection Calls: Whether or not bank account access has been granted, lenders will begin calling to collect on the debt. Anyone you used as a reference on the loan documents may also be called to help locate you. However, lenders cannot identify themselves or your loan details to your references.
- Negotiation: When possible, negotiate repayment terms with the lender. Typically, lenders would much rather collect money directly from you rather than selling your debt to an outside collections agency. Start by offering 50%, or as much as possible of what you owe to settle the debt. Just make sure to get the agreement in writing.
- Court Summons: If you are summoned to court for a defaulted loan, be sure to show up to your court date. Never ignore a lawsuit — no matter how small the original loan amount. A failure to show will result in an automatic win for the lender, which means the court can begin to collect the money you owe on behalf of the collections agency through property liens, bank account levies, or wage garnishment, depending on state laws where you live.
- Other Options: If you simply cannot repay your payday loan, consider other options such as community assistance programs to help with everyday expenses, credit and/or bankruptcy counseling, or legal aid.
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