What Options Do Payday Lenders Have if They Cannot Get Their Money Back?

Many people seem to be unaware of what kind of action a payday loan lender can take if they don’t receive their money back. Here’s how the process works for most lenders: After a payday loan company lends out their money to a customer, they typically cash the customer’s post dated check on the due date. If the check bounces, the lender will charge the customer a bounced check fee and try to contact them. When they get a hold of the customer, they’ll ask that they repay the loan or take out another payday loan to cover the cost of the last one. Now if the customer bounces another check or still cannot pay back the loan, the lender will again have them take out another loan or could possibly set up some type of payment plan. It varies from lender to lender; some may look to make more money off the interest rates on the debt, while others may simply want to just get back their money. At this point, if the customer still does not pay back the loan, the lender will start making phone calls to the customer, their references, and possibly their job. The lender could also hand the customer off to a collections agency, who will then start their process of getting the money back. Beyond this, there is not a whole lot more the payday loan company can do to get their money back. Some companies may attempt to sue a customer for purposely writing bad checks or check fraud, but most people can prove that they did originally intend to pay back the loan. However, just because the payday loan company has not legally forced you to pay back the loan, that doesn’t mean you shouldn’t do it.

Why You Should Pay Back Your Payday Loan

If you have an outstanding balance on a payday loan and haven’t bothered paying it back because you the company hasn’t actually forced you to, know that there are consequences for the debt. The major problem you’ll encounter if you don’t pay back your loan is that it will eventually get sent to a collections agency. These agencies will call your home, your work, your references, and even visit you in person if necessary. They will continue to contact you until you by mail, phone, or in person until you’ve paid back the loan. While this may only seem like an annoyance, it will also have a severely negative affect on your credit score. Having a debt sent to collections will always drop your score, which could then stop you from getting approved for new credit cards, car loans, and anything else that requires a decent credit score. If you owe money to a payday loan lender, it is definitely in your best interest to get the money paid off or at least contact the company to work out a plan, even if you find they cannot take any legal action against you for it.

Additional Resources:

• Check Fraud