Thursday 24th of April 2014

When a Payday Loan Company Goes to Collection

When you take out a payday loan, you are already in a tight financial spot. When you consider the high fees that payday loan companies usually charge for the service, it is understandable that many payday loan customers have been unable to pay back the loans in the amount of time agreed upon, or at all. This has been a boon to the collection industry. If your financial situation has gotten to the point where your payday loan company has written off the debt and sold it to a collections agency, the state of affairs is similar to any other collection situation.

What to Do if Your Payday Loan Debt Is In Collections

As a debtor, you have some legal rights when your debt goes to collection. The collection agency also has legal rights and restrictions when it comes to collecting the debt. Here is some advice on how to handle your debt after it has gone to collection:

  • Once you receive your first notice that a debt has gone to collection, you should go over the notice carefully and verify the amount owed. If you wish to dispute the amount owed you must notify the collector in writing within 30 days of receiving your first notice.
  • KEEP TRACK OF ALL COMMUNICATION. This includes phone calls and any correspondence.
  • The obvious and simple way to handle a collector is to pay the debt outright, even if you have to borrow from a relative or friend to do so. It is a messy situation and the collector might be harassing you at home and work, but this is the one way you are guaranteed to stop the harassment. You can also begin to fix your damaged credit.
  • The collector may be interested in “settling” the debt. This usually means that they will accept an amount lower than the original amount owed and will consider the debt paid. If you are skilled at bartering, you may wish to give this a try, even if the collector does not mention it first.
  • If a collector is particularly annoying and is calling you incessantly, you can send a “cease and desist” letter to ask them to stop contacting you. If you send this, they must stop contacting you except under specific circumstances. However, this action will not make your debt go away.
  • It is not legal for a collector to threaten, lie, or use obscene language with you when contacting you. They can only threaten you with a lawsuit if they actually intend to take you to court. If you feel a collector has broke laws you should contact the appropriate authorities, including the Federal Trade Commission, your state‚Äôs office of Attorney General, and you may be able to file a lawsuit against the collection agency.

Additional Resources