What happens when you dont pay back payday loans?

Question by Pat: What happens when you dont pay back payday loans?

Best answer:

Answer by Steve B
Most such loans require you to write out a cheque for the full amount when they give you the loan,.

So – I assume you are asking ‘what happens when my cheque is presented and there’s no money in my account ?’ ..

1) If there is some money, but not enough to cover the entire cheque, but the difference is small (typically less than £100), many Banks WILL pay out on the cheque, thereby forcing you into ‘Unauthorized Overdraft’ (so they can hit you with a fee (typ. £35) and charges (up to £5 a day) until you pay enough money into the account to get back in credit (don’t forget, there will be a 3-5 day delay if you pay more money by cheque, during which they will continue to charge you for being overdrawn ..)

2) If you are already overdrawn (or already exceeded your agreed overdraft) the bank will ‘bounce’ the cheque. The Bank will charge a fee for ‘bouncing’, typically £25.

A ‘bounced’ cheque is ‘returned to drawer’ i.e. goes back to the PayDay Loan Company. Since they know you are employed and your salary should be arriving in your account ‘any day now’, they will ‘present’ the cheque (try to get it paid) 2 or 3 more times over the following days (and each time the Bank ‘bounces’ it you will be charged again).

Once the Pay Day Loan Company realizes the Cheque isn’t ever going to be paid, they will start to hassle you for payment plus ‘penalty fees’. A common trick is to ring your work and start by telling the receptionist that they need to ‘contact you about a late payment’ – if that fails to do the trick they might try to get hold of you Boss and make suggestions about you ‘defaulting on payments’ (or ‘attempting to defraud’ them)

They WILL go to Court = a Small Claim will cost them about £35 (which they will add to the debt).

Even if you have lost your job and have no money (and the Court orders you to pay back at 50p a week), they CAN’T allow anyone to ‘get away with it’ (otherwise no-one would ever pay them back).

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