Payday loans: can you go to jail for not repaying them?

dots overlay

Payday loans: can you go to jail for not repaying them?


Over the last few years, payday loans have become extremely popular in the United States. The way these loans work is simple: in an emergency, you require cash urgently. Therefore, you contact payday lenders such as Advance America, Cash Central, and Speedy Cash, to receive short-term money you will need to pay back.

However, sometimes borrowers can struggle with making a repayment due to their financial situation or poor budgeting. What is the worst that can happen if you default on your payday loan?

By Editorial Team | 22nd February 2019
brand main banner
1. Bank withdrawals and collection calls

The first thing that will happen is that the lender will initiate attempts to withdraw money from your bank account if you have given him or her access as a part of your loan agreement. The bank will charge transfer fees on your account for every attempt that lender makes to get whatever he can recover from your account.

Simultaneously, you will be receiving a lot of calls from the lender. Even your relatives, who you wrote down as a witness for the loan agreement, may start getting these calls from the lender.

2. Jail threats and court appearances

Many payday loan defaulters may have experienced jail threats; however, the US law on debts states that a defaulter cannot be sent to jail for not paying back payday loans.

Failure to repay a payday loan is not a criminal offense, so you should not worry about having to serve jail time. However, some payday lenders may file a complaint against you, requiring you to attend a court hearing.

Young female calculates cost on desk at home office
You may have to attend court if you do not repay your payday loan (Picture: iStock by Getty)
3. A poor credit score

Most payday lenders take the option of calling payday loan defaulters. However, if they fail to recover any of the loan amounts, they may try to affect your credit rating. The payday loan lenders can approach credit bureaus and report your payment activity. With missing payments on your record, credit bureaus can rate you with a bad credit score. This way, your options for borrowing in the future become fairly limited as lenders will look at your credit history and conclude that you may not be able to pay back debt.

4. Getting into more debt

When borrowers fail to pay off payday loans, they may try to take out another loan to tackle the previous one. This results in people becoming trapped in a cycle where they only have the option of getting another loan to pay the previous one. Such a practice is the worst thing you can do while in debt, as you will never have the chance to improve your situation.

Old empty wallet in the hands .Vintage empty purse in hands of women . Poverty concept, Retirement. Special toning
It’s easy to get into more debt if you default on a payday loan (Picture: iStock by Getty)
What can you do instead?

If you default on your payday loan, there are peaceful ways to settle the dispute. Negotiation can take place between you and the payday loan lender, where you can tell the lender that you do not have enough cash to repay the loan. This is better than avoiding the situation and waiting for them to come to you with requests to pay it back.

Options from this point include deciding on an initial payment amount that is acceptable to you and the lender, requesting they extend your loan payment plan or lower the loan interest rate.


Defaulting on payday loans may put an unbearable burden on you, and interest on the loan will keep on multiplying.

If you have made the mistake of not paying back a payday loan, the best option is to talk to the lender and request they either extend your payment plan or lower the interest charges.

Written by
Editorial Team
Our Editorial Team is constantly watching for new and exciting services to report on. They aim to bring balanced, honest reviews to the site to give you the best comparisons and ensure you have the knowledge to choose the product right for you. Read more.
0 thoughts on “Payday loans: can you go to jail for not repaying them?

Leave a Reply

Your email address will not be published. Required fields are marked *. Your comment will have to be approved first and will not appear immediately.