When a borrower misses a payday loan payment, the lender can charge a fee for the missed payment and make an attempt to collect the debt. The lender may cash the check it has on file, which could trigger the check to bounce at the debtor's bank, states Washington Law Help. Payday lenders may decide to send a defaulted account to a collections agency.Know More
Defaulting on a payday loan can cause a lot of financial difficulties for the debtor, as lenders act quickly to collect the money, according to Washington Law Help. Fees and costs of trying to recover the funds can pile up. Borrowers in this situation sometimes are forced to close a bank account because of excessive fees that cannot be paid. Debtors also can expect to receive phone calls and letters from a collection agency regarding the unpaid loan. According to Credit.com, a settlement amount can sometimes be negotiated to resolve the debt.
Declaring bankruptcy is a drastic step, but it can free the debtor from the defaulted payday loan, states Credit.com. It is a myth that payday loans cannot be included in a bankruptcy, add Credit.com. This type of unsecured loan can be discharged the same as regular loans.Learn more about Personal Loans
Customers can apply for a payday loan in-person at a lender with proof of income and a valid checking account, according to Advance America. Some payday lenders also allow customers to apply for loans online through their websites, such as Ace Cash Express.Full Answer >
According to Money Super Market, when someone does not pay back a payday loan, interest and late charges are accrued and the debt will be sent to a debt collection agency. Payday lenders usually send the debt to a debt collection agency after a period of about two months.Full Answer >
There are a few different approaches to paying off a payday loan, including asking the lender for an extended payment plan (EPP) to allow for more time to pay off the loan before incurring penalties, reports Credit.com. Only certain lenders, particularly one that is a member of the Consumer Financial Services of America (CFSA), may be willing to offer an EPP. One common piece of advice for payday loan borrowers is to consult a nonprofit credit counseling service for advice on repayment.Full Answer >
Applying online for an instant payday loan involve going to the online lender's website, logging onto the website (depending on the lender) and then filling up the online application form on the website. During the application process, applicants are usually asked to provide their Social Security number, driver's license or photo ID and proof of income. While payday loans may appear to be helpful when finances are short in between paychecks, borrowers should be wary, as online payday loan scams abound, according to the Federal Trade Commission (FTC).Full Answer >