Can’t repay your payday loan? Then you are not alone. Despite everyone’s best intentions, sometimes payday loan borrowing does not go to plan. You may find that you are unable to repay your payday loan. It is possible that you will struggle to afford your monthly instalments.
Many people struggle with their debts, because of a change in circumstances. Some are in financial difficulty because they borrowed money without a clear repayment plan.
You should only borrow money if you know that you will have the funds available to clear your debt. Unfortunately, even the clearest plans can sometimes fail.
Asking for help when you can’t repay your payday loan
With any debt problem, the first step is to accept that you are struggling financially.
You can solve your debt problems quicker, and with much less stress, when debtors ask for help.
You do not have to struggle on your own.
Speak to your creditor if you can’t repay your payday loan
As soon as you realise that you are in over your head, you should contact your creditor.
This is a scary step, but it may help you to know that it is a rule for lenders to help you to find a solution. It is also in their interest to provide a solution that will result in the debt being repaid.
You may find that your creditor can make improvements immediately. They may put a 30-day hold on your account, or offer to extend your repayments.
If your repayments get extended, then you will be in debt for longer. You may have to pay more interest, but will be able to manage your monthly repayments more.
Some lenders will stop extra charges from building up, or could freeze your interest.
You may be able to make small token payments until your finances are back on track. If you are between jobs, this may be an option until you are back in stable employment.
You can choose how you contact your creditor, though it is usually best to speak on the phone. This gives you the opportunity for back-and-forth conversation that may help to get things resolved. It is also the fastest way to admit your debt problem. If you send a letter, you may wait weeks for a response.
Lenders have customer service teams trained to deal with cases of financial difficulty. You will not be the first person to call and admit that you can’t repay your payday loan.
Understanding your rights and responsibilities
If you can’t repay your payday loan, then you cannot get away with ignoring it. You have a responsibility to clear your debt, even if you cannot do so immediately.
Lenders have responsibilities, too. They cannot take your money if this leaves you without funds for essential living expenses, such as your rent and food.
Financial Conduct Authority regulations ensure that a Continuous Payment Authority (CPA) is not used to make repeated claims for money. If the CPA fails twice, they get suspended and must be reset by you, the borrower.
If your debt repayments are causing you to miss rent or mortgage payments, or have left you without money for essentials, you may want to consider cancelling your repayment agreement.
You can phone your bank to withdraw your Continuous Payment Authority. Do this at least 24 hours before your next payment is due, then contact your creditor immediately. Cancelling your CPA does not mean that you no longer owe the money.
Late payment charges and fees you should know if you can’t repay your payday loan
Payday lenders must follow strict regulations when dealing with late and missed payments.
Default fees get capped at £15.
You will never have to pay back more than 200% of your original borrowed amount. This means that if you borrow £100, the most that you can ever get charged is a further £100.
Getting help from debt charities if you can’t repay your payday loan
If you feel that you need more help when you can’t repay your payday loan, then you may wish to contact a debt charity or debt advice service.
They can help you to find the best solution based on your debt values, debt types, and individual circumstances.
A debt advice service may be able to help you through a Debt Management Plan. They can contact creditors on your behalf, negotiating and distributing reduced payments. Your Debt Management Plan (DMP) will extend the amount of time that you are in debt, but will reduce your monthly expenses.
If you are dealing with debt from many payday loans or have other creditors and debts, then you may need to take an alternative course of action.
Debt advice services can help with Individual Voluntary Arrangements (IVAs), Debt Relief Orders (DROs) or bankruptcy.
The advisors working for debt charities have a detailed understanding of the approaches to debt management. They can recommend which is best, then help with administration.
You may wish to contact:
Some debt charities have the option to provide your debt details online. You may have to contact by phone if your circumstances are not straight-forward.
If you have any complaints about debt charities, debt advice services or creditors, you can contact the Financial Ombudsman.
This is an independent service to judge whether you have received fair and responsible treatment.
Keep records of finances and debt communications
When contacting creditors, keep copies of any letters or emails that you send or receive.
If you need to make a complaint, it is important to have clear records of any contact attempts.
If you have not done so already, now is also a good time to take stock of your finances. You should create a budget and also look over your bank statements.
If you go down the route of debt management, you may need evidence of your income and expenditure to confirm your claims of financial difficulty. You should make sure that your bank account is in order.
Going over your current financial situation will provide an opportunity to make sure that you are not overspending.
Others might question any coffee shop visits and takeaways if you are claiming to be unable to repay what you owe.
Looking over your receipts and bank statements may help you to cut costs before you need to go any further.
It may be that you did not realise how much your low-value midweek grocery top-ups were adding up.
If you have no excess income, or if the excess is not enough to meet your debt repayments, you can speak to your creditors or ask a debt advice service for help.
Managing your debt when you can’t repay your payday loan
Before borrowing money, you should have a clear repayment plan.
It is important to know exactly when you can repay your loan, ensuring that you will meet any deadlines. You should know where the money will come from, to repay your debt.
If you are considering a payday loan, but already doubt your ability to pay it back, then it is important not to get one. There are payday loan alternatives that may be more suited to your needs.
Payday loans are short-term high-interest credit options. Their intention is for short-term emergencies and not for long-term or repeat borrowing.
If you are already experiencing financial difficulty, it is important not to borrow more money to service your debts.
Taking out a payday loan could send you into a debt spiral, or make your existing debt problems worse.
Instead of adding to your debt, contact your existing creditors. You may consider getting in touch with a debt advice charity.
Managing your debt problem
If you can’t repay your payday loan, then you have a debt problem.
This is true if you can’t repay a payday loan of £100 in value, or have thousands of pounds of debt that you are not able to keep up with.
Even a small debt problem can feel huge to the person that is struggling. This is why, for peace of mind and a weight off your shoulders, you should act as fast as possible.
It is important to seek help even if you believe there may still be other avenues that you haven’t tried.
Many people that begin to deal with their debts admit that they wish they had taken action sooner.