Payday Loans

The Consequences You Can Face If You Do Not Repay A Payday Loan

There are some really harsh consequences you can face if you do not repay a payday loan in time. However, it is very important for you to keep in mind that most states have specific laws in such cases that provide some legal rights to the borrowers also. Therefore, when it comes to getting yourself prepared to face those consequences, you must first make yourself aware of those rights. For example, you have the right not to be harassed in any manner – be it physical or psychological. The Fair Debt Collection Practices Act (FDCPA) applies to every state in the United States of America that protects consumers from debt collectors’ harassments. Many payday lenders or debt collectors may try to pressurize you to make the payments by giving threats like they will send you to jail. It is important to note that nonpayment of payday loans is not treated as a criminal offence and lenders cannot file a criminal lawsuit against you. Depending upon which state you belong to, following are some of the possible consequences that you may have to face.


One of the most common consequences you can face if you do not repay a payday loan is that the lenders can file a civil lawsuit against you and request the court to garnish your wages or to liquidate some of your assets so that they can get their money back. The normal procedure is that when the lenders fail to recover the debt, they transfer the account to a collection agency, and if the agency also fails to collect the debt, the lenders or the agency then file a civil lawsuit against the borrower in the court. A judgment from such cases is a legal declaration that you are liable to make the repayment on certain debt accounts. Depending upon your specific case and the kind of laws that are applicable in your state, the court may issue an order to garnish your wages or ask the lender to allow you to pay in easy installments over a certain period of time. It is important to note that many states have made it mandatory for the payday lenders to offer an affordable repayment plan to those borrowers who otherwise are facing difficulty in making the repayment. In case there is a court order for wage garnishment, your employer will get a court notice to seize a certain portion of your monthly salary and transfer the same to the court so that the same can be paid back to the lender. If the overall debt amount you owe is an overwhelming one, the debt may just hang over your head for several years. In such cases, you may eventually have to turn to debt relief programs, such as debt consolidation or debt settlement. Any such judgment also stays on your credit report for over seven years, which means you will also be struggling with your credit score for a long period of time.


The possible consequences you can face if you do not repay a payday loan also include having your debt account turned to collection status. As said above, this is what normally happens; when the attempts made by lenders fail to collect the debt, a collection agency is hired for this purpose. It is important to note that a debt account in collection status is also one of the worst entries that can appear on your credit report. This entry also stays on your report for at least seven years. Besides that, in these cases, you are going to have a tough time dealing with debt collectors.

Overall, as long as your debts remain unpaid, you will continue to face harsh consequences. Now, that you have a clear idea on some of the harsh consequences you can face if you do not repay a payday loan, it is very important for you to be very careful if you are thinking about borrowing a payday loan. Do not go for it unless you are sure that there are no better alternatives available out there and that you have an effective budget plan and you are 100% sure that you can make the repayment in time.

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