Instructions

1

Evaluate your loan agreement and history of payments. Determine if you have already paid the amount borrowed, and calculate how much interest above that amount you have paid. Compare these items to your state's laws for payday lenders to determine if the lender violated state regulations. For instance, some states such as North Carolina, Arizona and Maryland outlaw payday lenders from loaning funds to residents of their states, and an online payday lender might have altered the state on your application without informing you. Other states have a cap on how much interest a lender can charge. Note any violations.
2

Write and send a cease-and-desist letter to the payday lender, informing that you are revoking your authorization for them to cash your personal checks or deduct funds electronically from your checking account, effective immediately. Also state that you no longer wish to receive phone calls about your account at your place of employment, friends, family or home phone. Request that all future collection practices be made in writing. Include a statement in good faith that you are requesting a payment arrangement and why, if you have determined that the payday lender operated legally in all aspects of your cash advance. Mail the letter certified with return receipt so you have proof of delivery.
3

Follow up with a phone call and inform the payday lender you cannot pay the full balance. Briefly explain your circumstances and ask if it’s possible to reduce your interest rate. Politely request an affordable payment arrangement. If you noted any violations of state law, mention those so you can negotiate paying only the amount borrowed and a waiver of interest rates and other fees. Threaten to seek legal counsel if you know laws have been violated and the lender still refuses to agree to a payment arrangement.
4

Seek help. Consider hiring a debt settlement counselor to negotiate a repayment plan on your behalf. At the very least, take advantage of a free consultation with an attorney to verify how legally liable you are, if the loan is not repaid on time. Follow the attorney’s advice to avoid summary judgments or liens that could harm your credit rating. Contact your state’s attorney general’s office to ask for brochures, credit counseling referrals or advice on how to deal with your situation.
5

Verify the collection agency's identity, if you are still receiving harassing collection calls. Request a license number or do an online search for the company or law firm's credentials. Many payday loan collectors will use scare tactics, such as leaving voice messages threatening jail time or summary judgments against you. Others will make harassing calls to your place of employment or to friends and family. File a complaint against the lender for disobeying the Fair Debt Collection Practices Act. You can file complaints through the Federal Trade Commission, your state's attorney general's office or your state's consumer affairs office.