Payday Loan Debt can be quite difficult to deal with. Mainly because most of the lenders tend to reject your offers of repayment or require payment within a short space of time.
Typically though after around 3 months your Payday Loan Debt is sold or passed to a Debt Collection Agency and they will normally accept your repayment offer.
Some things to consider
There are few things you should keep in mind if you are looking to set up a repayment plan for your payday loan: –
- It is worth checking what options are available to you by asking the Payday Loan Lender.
- Your credit rating is likely to be affected.
- Your bank account could be emptied by the lender taking payment using Continuous Payment Authority.
- The lender may keep on chasing you for payment if a plan isn’t agreed.
Checking your Options
Wonga as an example may allow you to repay the account over 12 months. They ask you to complete an online income and expenditure form and then let you know if what you propose is acceptable. However payment is taken using your debit card. Missing a payment could see your account emptied. QuickQuid can also offer repayment plans over three months and again take payment by debit card. Missing a payment could cause you problems. So check with your payday lender first to see what they can do.
Your Credit Rating
As you will be behind with your repayments this information may be passed to the credit reference agencies. If the account falls into default this may also be recorded. These types of information will make it difficult for you to obtain credit in the future.
Continuous Payment Authority
A short description of CPA is that it is an arrangement between you and the lender that allows them to debit what is owed from your account with no notice. This could mean that even though you are trying to set up a repayment plan they may attempt to take payment anyway. This could leave you without any money. How you can deal with this will be covered later on in this guide. Another solution is to change to another bank although that is a lot of work and might not be possible in time. Reporting your debit card lost may work but it is still possible for payment to be taken.
Being Chased for Payment
This could involve phone calls and letters. It can be quite stressful to deal with. You can instruct the lender to remove your contact details and if they do not then you can complain to the Financial Ombudsman. However that process can take time.
The things you need to set up a repayment plan for your payday loan
Below are links to three documents you will need if you are going to set up a repayment plan: –
- A Template Letter to Cancel Continuous Payment Authority.
- A Template Offer of Repayment Letter.
- An Income and Expenditure Form.
Cancelling Continuous Payment Authority
The example letter should be sent to both your Bank and the Payday Loan Lender. This withdraws your consent for them to take payment from your Debit Card. This needs to be done quickly and before your payment is due. If you pay by direct debit you can simply cancel it and don’t need to send this letter. This letter only applies if you make repayment by debit card.
Making an Offer of Repayment
Using the example offer of repayment letter you can make an offer to pay the account at the amount you can afford per month. Working out how much you can pay leads onto the next thing you need listed below.
Income and Expenditure Form
You don’t have to send this but it will make your life easier if you do so. The Income and Expenditure Form is a list of your income, expenses and your other debts. Once you have that information you can then work out how much you can offer to the Payday Loan company. The Income and Expenditure Form above will calculate what you can pay.
Sending the Information
Most payday loan companies can be contacted by e-mail so you could send the information that way. Alternatively if you like you could also print the letters and form out and post it to them. If you do decide to post the documents remember to use a service that requires a signature. That way you have proof of delivery should you need it further down the line.
The Offer of Repayment has been rejected
If your offer of repayment is rejected but you have been provided with the details to allow you to make payment to their bank account then you should pay anyway. If you don’t have these details make sure you don’t give them your debit card information as they will try to take payment.
Eventually the account will be sold or transferred to a debt collector and they are usually easier to deal with. Just send the offer of repayment letter and your income and expenditure form through to them and you should be fine. Remember though that your credit rating will be affected.
- Cancel the Continuous Payment authority using the template letter.
- Work out how much you can pay using the template Income and Expenditure Form.
- Make an offer of repayment using the Offer of Repayment letter template.
- Send the information to the payday loan company. Send a copy of the Continuous Payment Authority Letter to your Bank.