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Being able to repay your loan can be an incredibly stressful situation. With this in mind, Finger Finance has covered the details of what you should do in a situation like this and laid out what will happen if you fail to repay your payday loan.


What will a payday lender do if I cannot repay the loan?

Defaulting on your payday loan can drain your bank account, trigger wage garnishment, collection calls and lawsuits. Wherever possible, keep up with your repayments to avoid these outcomes.

Once the agreed loan period has passed the lender who you borrowed from will continue to seek any unpaid amount on your loan. The lender will set up automatic withdrawals from your account, attempting to regain as much for their loan as possible.

This can result in bank fees for you. If this is unsuccessful your lender may begin collection calls, which will involve calling you you and in some cases visiting you in person to attempt to collect the debt.

If this is unsuccessful, your lender may set up wage garnishment, which involves a part of your paycheck being withheld, and going directly to the lender to repay your loan. During the time in which your loan is not being paid, it will still be accrediting interest.




What should I do if I cannot repay the loan?

When you realise that you will not be able to repay the loan, the first thing to do is to get in contact with your lender directly and see if you can work out a schedule for repayment that works for both you and the lender. Wherever possible the lender will try to make it possible for you to repay the loan.

Being unable to repay a loan can be an incredibly stressful situation. If you still need to pay rent and put food on the table for your family that has to come first. In situations like this, it is advisable to seek advice from a nonprofit credit counsellor, bankruptcy attorney or legal aid centre about your next moves. 

If you are unable to repay your loans, there is the possibility of claiming bankruptcy. Claiming bankruptcy is something that should be talked over with a professional and will only be appropriate in certain situations.

It is worth noting that a payday loan is only ever designed to be used as a short term fix, for unpredictable, unexpected one-off payments. A payday loan should be used to bridge the gap between one pay cheque and the next. That means that you should only ever be borrowing for a short period of time.


Will I go to court if i do not repay the payday loan?

If a client is unwilling to co-operate with the lender, it is possible for a payday lender to take you to court over your unpaid loan. This will always be a last resort and in the vast majority of cases the court does not need to be involved.

Court cases are not always about large sums of money. It is common for a lender to take a client to court over not repaying loan. You should not be surprised if you receive a lawsuit following an unpaid payday loan. There is key lots of advice available for anyone being taken to court over an unpaid payday loan.




Will I go to prison if i fail to repay my payday loan?

For those who are unable to repay a payday loan, many are worried about facing jail time. However, in the vast majority of cases you will not face jail time for failing to  repay a payday loan. A lender will always work with you to ensure you can repay your loan in the best way for you. If you would like more detail, we have written an article all about the consequences of not repaying your loan, and the fear of going to prison over an unpaid payday loan.

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Charlotte Diffey

Charlotte is an expert writer with lots of experience in the financial world. Read her articles for useful guides on payday loans and advice on how to boost your savings.