Can't Repay a Payday Loan? What to Do Next

If your due date is coming up and you know you can't cover the payment, act before the due date — not after. You have more leverage before you miss the payment than after.

1. Call the lender today. Not tomorrow, not on the due date. Call now and say: "I won't be able to make the full payment on my due date. What options do you have for an extended payment plan?" Many lenders would rather work with you than chase a defaulted loan. Some states require lenders to offer an extended payment plan if you ask — but you usually have to ask before the due date.
2. Get any agreement in writing. If the lender agrees to a payment plan, extension, or modified terms, ask for written confirmation — email is fine. Do not rely on a verbal promise. If the terms change later, your only protection is what's documented.
3. Check your bank account balance. If the lender has ACH authorization to debit your account and you can't cover it, the debit will bounce — and you'll be hit with a returned payment fee from the lender and an NSF fee from your bank. If you're sure you can't cover it, you may need to take steps to prevent the debit (see "Revoking ACH Authorization" below).
4. Don't take out another payday loan to cover this one. This is how the debt cycle starts. Borrowing from one lender to repay another doubles your fees and puts you further behind. Every option on this page is better than that.

Borrowers in financial trouble often don't know their rights. Lenders and collectors aren't required to volunteer this information — you need to know it yourself.

You cannot go to jail

No one can be jailed for failing to repay a payday loan. This is a civil debt, not a criminal matter. If a lender or collector threatens you with arrest or jail time, that is illegal. Report it to your state's financial regulator and the CFPB.

The one exception: if you wrote a check you knew would bounce at the time you wrote it, some states treat that as a separate offense. But a payday loan where your financial situation changed after you took the loan is not fraud — it's a debt you can't repay, and debtor's prisons were abolished in the United States in the 1800s.

Lenders can't debit your account unlimited times

Under the CFPB's payday lending rule, for covered payday, vehicle title, and certain other high-cost loans, the lender generally must stop attempting withdrawals from your bank account after two consecutive failed attempts — unless you provide new, specific written authorization for another attempt. This prevents the cascade of multiple NSF fees from repeated debit attempts on an empty account.

If a covered lender keeps attempting withdrawals after two consecutive failures without your new written authorization, file a complaint with the CFPB.

You can revoke ACH authorization

You have the legal right to stop an upcoming electronic debit from your bank account. There are two ways to do this:

• Tell your bank. Contact your bank at least three business days before the scheduled debit and request a "stop payment" on the specific transaction. Your bank may charge a fee for this — ask before you request it. Get the stop payment confirmation in writing.
• Tell the lender. Notify the lender in writing (email creates a record) that you are revoking your ACH authorization. Under federal law, the lender must honor your revocation. They may still try to collect the debt through other means, but they cannot continue to debit your bank account without your authorization.

You may be able to get an extended payment plan

Some states require licensed payday lenders to offer an extended payment plan (EPP) — sometimes called a "right to rescind" or "extended repayment option" — if you request one before or on the due date. Even in states that don't require it, many lenders will agree to a plan because collecting partial payments over time is better for them than writing off the loan. The specifics vary by state:

• Some states require the lender to offer a no-fee payment plan of 4–6 installments
• Some require this only once per 12-month period
• Some require you to request it before the original due date
• Some require the lender to provide written notice of this right before or at the time of the loan

Check your state's rules on our state lending guide. If your state requires an EPP and the lender refuses to offer one, file a complaint with your state's financial regulator — the lender is violating the law.

Third-party collectors must follow the rules

If your loan is sold or transferred to a third-party debt collector, that collector is bound by the Fair Debt Collection Practices Act (FDCPA). Note: the FDCPA applies specifically to third-party collectors — some states extend similar protections to original lenders collecting their own debts, but not all. Under the FDCPA, third-party collectors cannot:

• Call before 8 a.m. or after 9 p.m. in your time zone
• Threaten you with arrest, jail, or violence
• Use obscene or abusive language
• Call your workplace if they know your employer does not allow personal calls there
• Disclose your debt to family, friends, or your employer — they may contact others only to get your location information, and generally only once
• Misrepresent the amount you owe
• Add unauthorized fees or charges to the debt
• Threaten to sue if they don't actually intend to

If a collector violates any of these rules, you have the right to sue them — and you may be awarded up to $1,000 in statutory damages, plus compensation for actual harm, and the collector may have to pay your attorney's fees. Document every call, save every text, and keep every voicemail. Report violations to the CFPB and the FTC.

From least disruptive to most aggressive, here are your realistic options:

Option 1: Extended payment plan from the lender

Best first step. Call the lender and ask for a payment plan. If your state mandates one, mention it by name. Even in states that don't require it, many lenders will agree because collecting partial payments over time is better for them than writing off the loan entirely.

A typical EPP splits the balance into 4–6 equal installments over 60–180 days with no additional fees or interest. Get the plan terms in writing before making the first payment.

Option 2: Negotiate a lump-sum settlement

If you can come up with a partial payment — even 50%–70% of the balance — some lenders will accept it as payment in full, especially if the loan is already past due. Lenders know that a defaulted payday loan is expensive to collect, and a partial payment now is worth more to them than the full amount later.

If you negotiate a settlement, get written confirmation that the agreed amount constitutes "payment in full" and that the remaining balance will not be sent to collections or reported anywhere.

Option 3: Nonprofit credit counseling

A nonprofit credit counselor can help you build a budget, negotiate with the lender on your behalf, and create a debt management plan that covers all your obligations — not just the payday loan. This is especially useful if you have multiple debts competing for the same paycheck.

The NFCC at (800) 388-2227 provides free or low-cost counseling. This is a legitimate service — not a debt settlement company or a consolidation lender. Verify that any counselor you use is accredited by the NFCC or the Financial Counseling Association of America (FCAA).

Option 4: Prioritize and wait

If you genuinely can't pay anything right now — not even a partial amount — it may make sense to focus your limited money on essential obligations (rent, utilities, food) and let the payday loan default. This isn't ideal, but it may be the least harmful choice if the alternative is missing rent or going without food.

A payday loan default does not appear on your standard credit report in most cases (most payday lenders don't report to the three major bureaus). It may be reported to specialty consumer reporting agencies, and the lender may sell the debt to a collector, but it won't affect your credit score the way a credit card default would.

Revoke your ACH authorization first (see above) so the lender doesn't drain money you need for essentials.

Option 5: Legal aid

If a lender is threatening you, adding unauthorized fees, violating your state's payday lending laws, or refusing to honor your payment plan rights, you may need legal help. Many communities have free legal aid services for low-income residents. Find help at:

• LawHelp.org — free legal aid directory by state
• Legal Services Corporation — federally funded legal assistance
• Your state's bar association often has a free lawyer referral service

What they can do

• Charge the fees in your agreement. Returned payment fees and late fees as specified in your loan agreement and allowed by your state are legitimate charges. Check your agreement and compare to your state's fee caps.
• Contact you to collect. The lender can call, email, and text you about the debt, within the bounds of applicable law. If the lender is collecting directly (not a third-party collector), some states apply FDCPA-like rules; others don't.
• Sell the debt to a collector. After a period of non-payment, the lender may sell your debt to a third-party collection agency. At that point, the FDCPA fully applies to the collector.
• Sue you in civil court. The lender can file a civil lawsuit to collect the debt. If they win a judgment, they may be able to garnish wages or levy bank accounts depending on your state's rules. This is uncommon for small payday loan balances because the cost of litigation often exceeds the debt, but it's legally possible.

What they cannot do

• Threaten you with criminal charges or jail. Illegal. A payday loan is a civil debt. Report threats to your state regulator and the CFPB.
• Contact your employer about the debt. Third-party collectors under the FDCPA generally cannot disclose your debt to your employer. They may contact others only to get your location information — and even then, typically only once. Some states extend similar protections to original lenders.
• Add fees not in your agreement. The lender can only charge what was disclosed in the original loan agreement and what your state law allows. Any fee not in the agreement or exceeding state caps is a violation.
• Continue ACH debits after you revoke authorization. Once you revoke in writing, they must stop. Federal law protects this right.
• Make unlimited withdrawal attempts on covered loans. For covered payday and certain high-cost loans, after two consecutive failed attempts, the lender generally must stop unless you provide new written authorization.
• Threaten to sue without intending to. Under the FDCPA (for third-party collectors), threatening legal action the collector doesn't plan to take is a violation. If someone threatens to sue you every week for months without filing, that's likely illegal.

If you're reading this page, there's a good chance this isn't your first payday loan. The cycle — borrow, repay, come up short, borrow again — is the central problem with short-term lending, and it's by design. Breaking it requires addressing the underlying gap, not just the current loan.

Identify why you're short

There are two fundamentally different reasons people can't make it to the next paycheck:

• A one-time emergency. A car repair, medical bill, or unexpected expense that disrupted an otherwise workable budget. If this is your situation, the payday loan may have been a reasonable short-term solution — the goal now is just to get out of it cleanly and build an emergency buffer.
• A recurring gap. Your regular monthly expenses consistently exceed your regular income. No amount of short-term borrowing fixes this — it just adds fees to an already unworkable budget. This requires a structural fix: reduce expenses, increase income, or both.

Build a $500 buffer

Research consistently shows that even a small emergency fund — $250–$500 — dramatically reduces the likelihood of needing payday loans. That sounds impossible if you're currently short, but it doesn't have to happen all at once. Even $20 per paycheck in a separate account builds to $500 in a year.

The key is a separate account — not your checking account where it'll get spent. A basic savings account at your bank or credit union with no card attached makes it harder to dip into.

Get help from a credit counselor

A nonprofit credit counselor can look at your full financial picture — income, expenses, debts, obligations — and help you build a plan that doesn't depend on short-term borrowing. This is free through the NFCC at (800) 388-2227.

This is not debt settlement (which charges high fees and damages your credit). This is not a consolidation loan (which adds another debt). This is a trained professional sitting with you and helping you figure out how to make the math work. If you only do one thing after reading this page, make this call.

This is one area where payday loans are less damaging than people expect:

• Most payday lenders don't report to the three major credit bureaus (Equifax, Experian, TransUnion) at origination. That means taking out a payday loan — and even defaulting on one — usually doesn't appear on your standard credit report or directly affect your FICO or VantageScore.
• Specialty databases are different. Some payday lenders report to specialty consumer reporting agencies like Clarity Services or TeleTrack. Other payday lenders may check these databases when evaluating your application. A default here won't affect your conventional credit score but may affect your ability to get another payday loan.
• Collections may change things. A payday loan usually doesn't appear on the major bureaus when you take it out, but if the debt is later sold to a collector, that collector's reporting practices may be different — and a collection account could potentially appear on your credit report.
• Bank account issues are the bigger risk. Repeated NSF fees, forced account closures, or negative ChexSystems reports from bounced payday debits can make it difficult to open a new bank account — which is a more immediate practical problem than a credit score hit.

For more on how credit works with bad credit lending, see our bad credit guide.

Take immediate action if any of the following happen:

• Threats of arrest or jail. Illegal. Always. No exceptions for payday loans.
• A third-party collector calls your family, friends, or coworkers about your debt. Illegal under the FDCPA — collectors may contact others only to locate you, generally only once, and cannot disclose the debt. Some states also restrict original lenders from this practice.
• Demands for payment methods not in your agreement. If your agreement says ACH and the collector demands a prepaid card, wire transfer, or gift card — that's a scam.
• Threats of wage garnishment without a court judgment. A lender can't garnish your wages without first suing you and winning a judgment. If someone threatens garnishment before a lawsuit, they're lying.
• Fees that exceed your state's caps. Check your state guide for the maximum returned payment fee and late fee. If the lender charges more, they're violating state law.
• Continued bank debits after you revoked authorization. If you revoked in writing and they're still trying, file a CFPB complaint and contact your bank. For covered payday and certain high-cost loans, the two-failed-attempts rule also applies.
• A collector you don't recognize claiming you owe a debt you've never heard of. Demand written verification of the debt within 30 days — this is your right under the FDCPA. Do not pay anything until you verify the debt is real and the amount is correct.

Where to report violations

• CFPB complaint portal — for lender and collector violations
• FTC — for deceptive practices and scams
• Your state's financial regulator — for state lending law violations
• Your state attorney general's office — for threats, harassment, or fraud

Print this or screenshot it. Work through it in order:

1. Call the lender and ask for an extended payment plan. Do this before the due date if possible. Mention your state's EPP requirement if applicable. Get terms in writing.
2. Check your bank balance. If you can't cover an incoming debit, consider revoking ACH authorization (notify both the lender and your bank in writing).
3. Don't take out another payday loan. Resist the urge. Every other option on this page costs less.
4. Call the NFCC at (800) 388-2227. Schedule a free credit counseling session. They can help you negotiate with the lender and build a plan for the rest of your bills.
5. Check your state's rules. Visit your state lending guide to see what protections you have — EPP requirements, fee caps, cooling-off periods, rollover limits.
6. Document everything. Save every email, screenshot every text, log every call (date, time, what was said). If the lender or a collector crosses the line, this documentation is your evidence.
7. If threatened, report it. File complaints with the CFPB, FTC, and your state regulator. If threats continue, contact LawHelp.org for free legal assistance.
8. Start a buffer. Even $10 per paycheck in a separate account. The goal is to never need a payday loan again.

• CFPB: What can I do if I can't repay a payday loan?
• CFPB: Can a payday lender garnish my wages?
• CFPB: What is a debt collector and how do I deal with one?
• CFPB: File a complaint
• NFCC: Free credit counseling
• LawHelp.org: Free legal aid by state
• 211.org: Local emergency assistance
• LendUp: State lending guides