Can you go to jail for not paying loans 

can you go to jail for not paying a payday loan

While you won’t go to jail for not paying back a payday lender, there are still other negative consequences you’ll have to deal with. Due to these consequences, it’s best never to let payday loans go unpaid. 

Is your unpaid payday loan stressing you out and leaving you thinking, “Can you go to jail for not paying a payday loan?” Federal law dictates that lenders may take delinquent borrowers to civil court over unpaid payday loans, not a criminal court. In fact, it is actually illegal for payday lenders or debt collectors to threaten you with jail time over an unpaid payday loan.

What Can Happen if You Don’t Pay Back a Payday Lender

What can a payday lender do to borrowers who don’t pay back their debt? While they can’t necessarily issue an arrest warrant, there are still several actions they may be legally allowed to take. Below is more information on some of the negative consequences that can come from unpaid payday loans. 

Court Summons

If a payday lender wants to make a court case out of your unpaid debt, they will send you a court summons. On the court summons you will find your court dates and other important information regarding the court proceedings. If you receive a court order, do not ignore it. Make your best effort to be at your court appearance on time and adhere to the court judgment. 

Court would also be the ideal place to air any concerns you may have about your payday lender. For example, if you are being charged additional fees not disclosed in your loan contract, making payments that are not showing up in your payment history, or cannot get in touch with your payday lender to discuss issues, say this on your court date. 

Wage Garnishment

In some instances, a payday loan lender may have the right to garnish your wages in order to get back the money they are owed. Wage garnishment is when lenders or debt collectors take money directly from a borrower’s bank account, with or without the account holder’s permission. Garnishing wages can also lead to other inconveniences, such as a negative bank account balance or missed payments for other bills and expenses. 

Any intention to garnish wages for unpaid payday loan debt should be clearly listed in the loan agreement. Details like this are why it is so important for borrowers to read and understand their loan contracts before signing. 

How To Deal With a Debt Collector for Payday Loans

Lenders who fail to receive payment from borrowers may send their unpaid bills to a debt collector. Debt collectors are agencies that essentially purchase unpaid debt. When lenders send outstanding loans to debt collectors, they help reduce the financial burden caused by delinquent borrowers. 

Like payday lenders, debt collectors also cannot send you to jail. If a debt collector threatens you with jail time, you may want to contact your state’s attorney general. The attorney general acts as a public lawyer for individuals who may not be able to afford one. If you feel like you are being taken advantage of when dealing with a debt collector or payday lender, the state attorneys general may be able to help you out. 

What To Do When You Can’t Pay Back a Payday Loan

What should payday loan borrowers do if they can’t repay their loan? The first step is to contact your lender right away. They may be able to adjust your rate if it means preventing you from defaulting on your loan. 

The next step is to come up with a payment plan. If you cannot repay your payday loan with the current payback schedule, consider refinancing. You may find that refinancing with a new loan works better for your budget. With refinancing, you may be able to get lower rates, more time to pay, and sometimes even additional funding. 

If there is absolutely no way you can make a loan payment, you may want to contact an experienced bankruptcy lawyer or bankruptcy attorney. Declaring bankruptcy should always be a last resort. Before taking this step, you may want to talk to a credit counselor and get a professional opinion. They may suggest you either settle or consolidate your debt. 

Should I Settle Payday Loan Debt or Consolidate?

Struggling with your debt may have you considering which is the better option, debt settlement or debt consolidation. Debt settlement may knock your credit score down a few points and indicate to future lenders that you are a financial risk. Debt consolidation may help you take care of not only payday loan debt but also other debts. 

To find out how much money you need to consolidate debt, go through your various loans and add up the balances. This will give you a rough estimate of how much cash you need to consolidate your debt entirely. After you are approved for a loan, you can rest easy knowing that your debts have been consolidated down to one easy monthly payment.

Can Delinquent Payments to Payday Lenders Affect Your Credit?

Missed payments to a payday lender will absolutely affect your credit score. Payment history is crucial when it comes to a healthy credit score. Missing payments or defaulting on loans hurts your payment history badly. In fact, missed or delinquent payments can harm your credit score for up to seven years. 

Other factors that affect your credit score are: 

  • Length of credit history
  • Credit mix
  • The number of hard credit checks
  • Debt-to-income ratio

Pros and Cons of Payday Loans

Why are payday loans such a popular funding choice for borrowers all over the United States? The advantages of a payday loan include quick funding and relaxed qualification requirements. People can usually get instantly approved for a payday loan even if they are going through bankruptcy, have extremely poor credit, or have a low income. When people are going through a financial emergency and don’t have time to research lenders, it’s easy to turn to a payday loan for immediate cash. 

However the disadvantages of payday loans usually outweigh any potential advantages. The high-interest rates and exceptionally brief repayment periods with payday loans often leave borrowers in a cycle of debt. Payday lenders usually expect borrowers to repay their entire balance at the time of their next payday, typically two weeks. Borrowers who fail to pay off their loan within this time are at risk of getting stuck with a very high-interest rate loan. Payday loan rates often make it extremely difficult for borrowers to pay off their balance, leaving them with increasing debt. 

Before you sign a contract and commit to a payday loan, make sure you will be able to handle the strict terms. You may find that payday loans are not worth it, and there are other ways to find funding that are much more convenient. 

Alternatives to a Payday Loan

If you are thinking, “I need a payday loan immediately,” think again. Thankfully there are other ways you can access quick and convenient cash. Below are some alternatives you may find more convenient than a payday loan.   

Debt Consolidation Loans

As discussed, debt consolidation may be the best solution for taking care of payday loan debt. Depending on your financial situation, you may find that a particular type of debt consolidation loan works best for you. 

Personal Installment Loans

Debating between payday loans vs. personal installment loans? A personal loan can come with all the advantages you may find with a payday loan, like quick funding and easy requirements. But installment loans also offer other benefits you won’t find with a payday loan, such as: 

  • Industry-wide competitive interest rate
  • Flexible repayment plan
  • Convenient fixed monthly payment 

Not only are installment loans a better alternative to payday loans, but they also can act as a great debt consolidation loan. 

Bank Loans

Many borrowers with ideal credit may be able to take advantage of traditional loans from a bank. Banks rely almost exclusively on credit scores when they determine loan approval, so make sure you only apply if you are confident about your credit history. 

Credit Union Loans

Credit unions also offer loans to people who meet their strict requirements. Credit unions cater to people in a particular workforce who have a specific credit score or who live within a certain township or county. 

Fixed-rate vs. Variable Rate Loans

Your interest rate is one of the most influential factors in your loan. Depending on your budget, you may find that fixed or variable interest rates work best for you. Fixed rates stay consistent throughout the life of a loan, which means loan payments also remain the same. Variable rates may go up or down throughout the life of a loan, which means you may save money on some loan payments or pay more on others. 

The Bottom Line With CreditNinja: Payday Lenders and Jail Time 

While a payday lender cannot send you to jail for not paying back your loan, there are still other consequences you will have to deal with. To avoid unwanted calls from debt collectors or a declining credit score, CreditNinja urges you to do your best to always pay back your debts!


  1. Can You Go to Jail for a Payday Loan? | SoloSuit Blog
  2. State Attorneys General | USAGov

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