It is a horrible thought- jail time for not repaying a payday loan. Although threats of jail time are sometimes used by some less than scrupulous lenders, failure to repay a payday loan is not a criminal offense. If you are threatened with arrest for nonpayment, the Consumer Financial Protection Bureau advises contacting your state attorney general’s office.

Keep in mind, a payday loan is a binding, legal agreement, and depending on the state you live in, some payday lenders will use bad-check laws that can lead to bank overdraft fees, garnishment of paychecks, collection calls, and filing a criminal complaint that may result in having to appear in court. You should never ignore a court summons, even if the criminal complaint was filed mistakenly. Show up on time, be respectful of the court by answering the judge politely and request the lender provide proof that you owe the money.

If you fail to appear in court, the lender will usually win a default judgment, and the court can begin the process of collecting the money you owe. If you are unable to pay the judgment, the court may allow you to make installment payments that you can afford. However, depending on the state you live in, a judgment for the lender could result in property liens, bank account levies and garnishment of wages.

What if you cannot pay the payday loan?

Before paying a payday loan be sure to focus on your necessities first, such as food, utility bills and paying rent. Check to see if you are eligible for community assistance, as there is often help with rent, utilities, or food.

How to get ahead of your payday loan debt

You can try to settle your pay day loan debt for less than you owe. Most lenders would rather collect money directly from you instead of selling your payday loan debt to a collection agency for pennies on the dollar.

Working with a debt relief company who specializes in settling payday loan debt, can be very advantageous. Debt relief firms typically have the expertise to negotiate with payday loan debt lenders and collection agencies. They also often have the experience to come to a resolution with the lender.