What Happens If I Do Not Pay Back A Payday Loan

Payday loans may increase financial problems.

People with credit problems may look to a payday loan in a financial emergency. Despite this, if the borrower is unable to pay back the payday loan, his situation may become worse.

Phone Calls

Soon after a missed payment, the payday lender typically will attempt to contact the borrower to collect the payment. If phone numbers for relatives and friends were required as part of the loan application, they may be called as well.

House Calls

Rarely, a lender will make a house call in an attempt to make contact if they aren’t successful by phone. Most lenders don’t do this, and the ones that do will only do it once or twice.

Checking Withdrawal

Payday loans are normally tied to the borrower’s checking account. The lender may attempt to take the funds at any time after the due date and may attempt more than once if the funds aren’t available, resulting in multiple overdraft charges.


Most lenders will simply send the debt to collections if all else fails. The collection agency may report this to the credit bureaus and attempt to contact the borrower.

Small Claims

Some lenders will choose to go to small claims court. A public records entry is then made on the borrower’s credit report and the court may attempt to collect the debt through garnishment or may leave it up to the borrower to work out a payment agreement with the lender.