It can be incredibly stressful if you find yourself in the unfortunate situation of being unable to meet your repayment schedule for a payday loan. The main implications of a failure to repay your payday loan are: follow up correspondence from your lender such as calls and emails, late fees and added interest, and a negative impact on your credit score, which in turn makes it more difficult to get credit elsewhere in the future.




What Will a Payday Lender Do If I Can’t Repay My Payday Loan?


If you can’t repay your payday loan, there are several actions that your payday lender may take. Typically, payday lenders enforce wage garnishment, lawsuits, and debt collection. Whilst incredibly rare, time in prison has also been given for failure to repay money that is owed.

After the agreed upon loan period has ended, the lender may implement one or more of these actions to obtain any unpaid funds. They are also able to instigate automatic withdrawals from your bank account, which could result in bank fees for yourself.

If this proves to be unsuccessful, they could set up wage garnishment. This would involve a portion of your wages being withheld and then sent directly to your lender. If all else fails, your lender may take you down a legal route and you could be summoned to court.


What Should I Do If I Can’t Repay My Payday Loan?


As soon as you realise you will be unable to repay your payday loan, you should immediately contact your payday lender. Your lender will try to find an arrangement that makes it possible for you to repay the loan that works well for both parties. You may be able to agree to a payment schedule that would be more affordable for you.

We know how incredibly stressful it can be when you find yourself unable to meet your loan repayments. You may worry about how you will be able to support yourself and your family financially.

In this case, you can speak to nonprofit credit counsellors, bankruptcy attorneys, or legal aid centers who can help you find out more about your options, and help you plan for a better financial future. In certain situations where you are unable to repay your loans, claiming bankruptcy may be a relevant possibility. However, before you declare bankruptcy, you should always discuss this with a professional, as declaring bankruptcy is not always an option.



Will I Be Summoned to Court for Not Repaying My Payday Loan?


Well before considering legal action, a lender will try to create an alternative payment arrangement that suits both of your needs – usually one that enables more affordable payments. If a lender can find no alternative or a client is uncooperative, they may take you to court for not paying back a payday loan. Lenders do not just take large loans to court, so you shouldn’t be surprised if your lender takes you to court over what you feel is a relatively small amount of money. Lenders will bring both small and large cases alike to court in order to get the money they are owed.

If you are summoned to court, make sure that you show up! Under no circumstances should you ever ignore a lawsuit – you should always turn up in court when you have been asked to do so. Oftentimes, lenders automatically win cases because clients fail to attend court. No matter your circumstances, it is always in your best interest to show up to a court date, otherwise you have no chance of winning the case.




Will I Go To Prison For Not Repaying a Payday Loan?


In most cases, you do not need to worry about going to prison for failing to repay back a payday loan. In the stressful situation of failing to make a payday loan repayment, you may begin to spiral and become scared that you may face jail time. In the vast majority of cases, this is absolutely not the case.

However, if you cannot repay your payday loan, this will negatively affect your credit rating. A low credit rating makes it more challenging to borrow money in the future. As such, you should carefully consider whether you have any way to settle your payday loan debt to avoid dealing with the repercussions. If you have failed to meet the agreed-upon payments on time, your loan will continue to accrue extra interest making the debt difficult to manage.