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What to do if you can’t make a payment

Missing a payment on a short-term loan can be very expensive and can affect you for a long time. If you can’t make a payment, you need to act quickly – ideally well before the payment is due. Don’t leave it until you’ve actually missed the payment, because that’s when they hit you with huge penalties and late fees. If you still don’t pay, you could find yourself in court.

If your lender is legitimate, they will work with you to resolve the situation. There are many laws and regulations they have to comply with. If they’re not legitimate, if they harass you, if they don’t comply with the law, or if you’re not happy with the way they’re treating you, you should complain immediately to the government or regulatory authorities. (This varies depending on your location: search for “complain about a lender” or talk to a debt counselor.)

  • Contact your lender right away: They are required to work with you in a number of ways. They must refer you to people who can provide you with advice, and they’re not allowed to harass you.
  • Talk to a debt counselor: They’ll be able to give you impartial advice on your options. If you’re working with a debt counselor, lenders are required to give you reasonable opportunity to figure out a repayment plan, and must give you an option to delay payments while you come up with a solution.
  • Cancel the recurring payment if you don’t have the money: If making the loan payment will leave you without enough to cover essentials such as rent, food or bills, then it may be best to cancel it. Call your bank and tell them you wish to cancel the payment authority at least two business days before the payment is due. The lender will no longer have the right to withdraw money from your account. You must inform them that you have done this.
  • Make a token payment: Even if you can’t pay the full amount, offer to pay what you can. This shows your lender that you’re doing your best and not simply trying to get out of paying them. They are obliged to accept a partial payment.
  • Keep detailed records of everything: Save a copy of every email or letter, and write down whatever was said on every phone call. You may need this as evidence if the lender threatens to take you to court and you need to show what you did to resolve the situation and what was agreed.

If you act quickly as soon as you realize you can’t make the payment, and show your lender that you’re trying to resolve the situation, you can usually find a solution.