- File a report with your state’s attorney general. If you don’t know who your state attorney general is, you can find his or her information by contacting the National Association of Attorneys General by visiting or by calling 202-326-6000.
- File a report with your state regulator. The CFPB has a list of each state’s bank regulator and their contact information on their website.
- File a report with the CFPB by calling 855-411-2372 or by filling out their online form.
The CFPB states that “if you are sued or a court judgment has been entered against you and you ignore a court order to appear, a judge may issue a warrant for your arrest.” Your jail time would be a result of not cooperating with the courts, not the fact that you owe a debt.
While you may be tempted to ignore a court summons, DO NOT DO THIS. Appearing in court is intimidating and inconvenient and may cause you to have to miss work, but if you fail to appear, not only will jail be on the table, but a judge could order wage garnishment.
- Contact the payday loan lender and negotiate for better terms. This shows you want to repay the loan, and in many cases, the lender would rather settle for a smaller payment over a longer period of time than no money at all.
- Reach out to a bankruptcy attorney to go over your finances and see if filing Chapter 7 or Chapter 13 bankruptcy is advisable. Both of these filings cover payday loans.
- Seek advice from a credit counselor. A credit counselor may be able to consolidate your debts, provide you with a smaller interest rate and offer you better repayment terms.
- Attend all court proceedings. If you can, consult with an attorney. The attorney may be able to intervene and get the lender to agree to a new repayment plan that you can actually afford. Many attorneys offer a free initial consultation.
- Abide by all court rulings.
What About the Horror Stories?
Debt collectors will often stoop to low levels in order to coax a payment out of a borrower. CNN Money reported on several collection agencies that used such scare and intimidation tactics as threatening jail time and sending Child Protective Services to the home. The online news magazine also revealed that one collection agency went as far as to threaten to kill a debtor’s dog.
After investigating, CNBC found that most borrowers are busy working multiple jobs and trying to juggle child care. When a borrower can’t attend one of their court hearings for an unpaid debt, the debt collectors go straight to pursuing an arrest warrant. In many cases, an arrest warrant is issued.
Fortunately, the American Civil Liberties Union (ACLU) is committed to abolishing jail time for individuals who owe a debt. They are dedicated to uncovering the unjust practices of debt collectors and to pleading with the courts to establish fair laws when it comes to debt.
The Bottom Line
You cannot go to jail for failing to repay a payday loan. You can, however, be sentenced to jail if you miss a court appearance or ignore a court summons. Be proactive and make sure that you’re there and fully prepared for any court challenge. Better still, work with your lender first to avoid any court summons in the first place.
Attorney fees will usually depend on the complexity of your case. They will charge you based on the scope of work, amount of debt owed, and difficulty of settlement. The good news is that most law firms offer a free initial consultation, which can help you figure out a strategy if you’ve gotten a court summons, or if you’re thinking about filing for bankruptcy.