 TITLE: What Happens If I Stop Paying My Payday Loan? CONTENT: What to Do if Your Payday Loan Goes Into Collections\n----------------------------------------------------\nIf all that fails and the delinquent payday loan gets routed to collections, you have another potential opportunity. Instead of paying the full debt, you may be able to negotiate the balance down.\nThird-party collectors purchase debts at a discount and then try to collect the total amount due. However, if you can come to an agreement with the collector where they still make a profit and you pay less than you owe, you both win—sort of. The downside to this option is that it will show up on your credit report as \"settled,\" which doesn't look as attractive as \"paid in full,\" so you will have to evaluate the financial benefit against the credit report imperfection. However you deal with a collection account, though, it will remain on your credit report for the same seven years.\nIt's also a wise idea to visit a nonprofit credit counseling agency. These organizations provide free financial counseling to the public. They can assist you with developing a budget so you can handle your liabilities. If you can afford to cover your basic living expenses and have some money left over, you may be able to use their debt management plan. This is a program where you send one payment to the agency, and they disburse the funds to your creditors, which can include a payday loan collector.\nAnd if you're sued by your payday lender for non-payment? Chances are the amount you owe will have grown, and now will have additional court and attorneys fees, so prepare yourself for sticker shock. To deal with this type of debt, you can pay it in full or work out an installment payment plan. In some cases the judgment creditor (the payday lender that sued you) is allowed to extract a portion of your paycheck with a wage garnishment, but you may be able to modify the amount it takes by filing a claim of exemption.\nIf you're worried that you will not be able to quickly repay a payday loan, consider it a sign that it's not a good idea in the first place and seek other options, such as borrowing from family or friends, or getting a personal loan. Payday loans work only in certain circumstances. You have to be sure that you'll delete the borrowed sum with your next paycheck, and that the payment won't leave you so short on upcoming expenses that you'll have to return for another advance. That's a vicious cycle you don't want to enter. END