When you borrow money from a payday lender, your repayment could take place in one of three ways:
- The post-dated check that you have provided at the time of taking the loan is cashed.
- The ACH (Automated Clearing House) authorization that you gave is used to take out money from your bank account electronically.
- You return to the payday loan store and repay the sum that you owe.
But what if you don’t visit the lender to repay and there is not enough money in your bank account as well? If this happens, the payday lender will start calling you. They may even contact friends or relatives who you used as a reference at the time that you signed the loan documents.
What should you do? One way to handle the situation is to avoid the calls and throw away the letters that you receive from the payday lender. Many borrowers take this approach. In any case, they don’t have the money to repay, so why should they bother to talk to the lender or its debt collection agency?
However, taking this approach is not advisable. It will only get you in more trouble, and you could expose yourself to wage garnishment or your property getting seized.
Is there a better way to tackle the collection calls?
4 rules to follow when talking to your payday loan creditor
If you are in debt to the payday loan company, don’t think that they will give up if you ignore them. They will use every trick in the book to get their money back.
Here’s what you should do when they contact you:
1. Be polite – it can be difficult to handle the stress of multiple calls asking you to repay the amount that you owe. However, don’t take it out on the person who is on the other end of the line.
Adopt a courteous and civil tone. This will allow you to hold a rational conversation and may even provide you with some information that could help to plan your next step.
What should you say? Stick to the facts. If you have lost your job or have not been in a position to pay because you were unwell, tell the caller that. Remember that you should be consistent. The caller is probably making a note of what you are saying and changing what you say every time somebody speaks to you will reflect poorly.
2. Don’t lose your temper – it can be gratifying to shout at the caller when you receive a collection call. But it won’t serve any purpose. Instead, adopt a stance that could help you.
Remember that you have certain rights under the law. The Federal Trade Commission, an independent agency of the United States government, has the task of ensuring that business organizations provide consumers with the rights that they are entitled to. Under these rules, a payday lender can’t:
- Threaten you if you don’t pay.
- Tell you that they will take away your property. However, they can do this if they follow the correct legal process.
- Call you again and again to annoy you.
- Falsely claim to be a government representative or an attorney.
What can you do if you think that the payday lender is breaking these rules? You have the right to file a complaint with the FTC.
3. Be truthful – never make a commitment that you can’t keep – when you talk to the payday loan company, it’s a good idea to have a repayment plan ready. Tell them how much you can pay and the dates on which you will make the payments. This will reassure the lender. It will also help to establish that you are serious about repaying the loan.
But make sure that you stick to your commitment. Deviating from your repayment plan is sure to destroy your credibility.
4. Maintain a record of your interaction with the payday lender – when you receive a call from the lender, write down the name of the person who you speak to and the date and time of the call. What was discussed? Did you make a promise to pay? Save the emails that you get and file the letters carefully.
If you receive an offer to settle, make sure that you get it in writing. Don’t pay before this. If you do, the company may deny that they made an offer at all.
Talking is not enough; you need to follow it up with a letter
Some borrowers are not very sure about how to write to the payday loan company. Say, you get a letter offering to settle your loan of $1,000 for a sum of $800. You are keen to accept the compromise but can’t afford to pay that much. The maximum amount that you can bear is $500. What should the letter that you write to the company say? What are the issues that you must mention so that you protect yourself from additional claims?
See how it’s done in this letter template you can fill out and print directly from our website:
Need help with different types of letters?
Check out our Letters to Creditors portal which provides a multitude of letter templates you can fill out online in minutes and print directly from our website: debt settlement offer letters, debt validation letters, credit bureau inquiries and many other communications with creditors are all covered on this portal.
Know your numbers
When you are in the process of negotiating with the payday lender, there is another issue that you must address. What is the precise sum that you owe? If you can afford to pay, say, $200 every month, how long will it take to become debt free? How much can you save in the process?
Here are several calculators that can help you to carry out these calculations:
- Debt Payoff Calculator
- Debt to Income Ratio Calculator
- APR (Annual Percentage Rate) Calculator
- Credit Card Payment Calculator
The bottom line
Should you go through the trouble of speaking to the lender when you know that you can’t pay? Isn’t it all a waste of your time and effort?
Remember that it is in your interest to keep the lines of communication open. If you ignore the calls and letters that the payday lender sends you, the final result could be a legal judgment that permits your wages to be garnished or your property to be handed over to your creditor. That’s something you want to prevent.
Speak to Real PDL Help. You may be surprised to learn how easy it is to pay off your loan and get your financial life back on track.