How Long Can Creditors Collect on a Payday Loan?

Payday loans provide instant cash between paychecks, but you have to pay the loan back with interest on your next payday. Many states prohibit these types of loans, while others regulate them heavily, because payday lenders charge extremely high interest rates. Payday lenders can sue you to collect their debt if you don't pay them back as long as they don't exceed your state's statute of limitations on debt collection.


State Laws Vary

State law determines whether payday loans are legal and how long creditors have to collect on payday loans. State laws also govern whether payday lenders can press criminal charges against debtors who do not pay back their payday loans as agreed. For example, in California payday lenders may only charge debtors a fee of $15 if their check is returned, while in Florida, lenders can collect up to three times the amount owed, including attorney's fees.


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Civil Actions

Most states have several different statutes of limitations for debts. Payday loans usually fall under debts agreed to by written contract, as borrowers must sign a loan agreement at the time they take out payday loans. Thus, the payday lender must file a lawsuit against you to collect unpaid payday loans within the statute of limitations for collecting this type of debt in your state. Lenders can still contact you to make payment arrangements after the statute of limitations expires; they just cannot use the court system to attempt to collect it.


Criminal Charges

In most states, payday lenders cannot press criminal charges against debtors if they fail to pay their payday loans. In a few states, payday lenders can press charges for passing a bad check if the debtor's check is returned for insufficient funds. The court could then order the debtor to payback the payday loan as restitution after he is convicted of passing a bad check. In these states, the statute of limitations for passing bad checks would apply to how long the lender has to press such charges.



Most U.S. courts look negatively on payday lenders because they charge high rates of interest and offer very short-term loans. However, if you enter into a loan with a payday lender, you still owe the money and you should pay it back as soon as possible. Payday lenders can still report you to the credit bureaus and may sue you to recover the debt. Don't enter into a payday loan unless you are sure you can pay the loan back at your next payday.