How do I get out of payday loan debt? Find out in 5 steps

posted by in Payday Loans

UPDATE: 1 July 2014 – new rules from the Financial Conduct Authority (FCA) means that payday loan companies:

  • cannot rollover an outstanding payday loan balance more than twice
  • must send the debtor an information sheet with contact details for various debt advice organisations. A copy of this information sheet can be seen here
  • cannot make more than two attempts to deduct money from a debtor’s bank account by means of Continuous Payment Authority (CPA) unless a rollover has been agreed.
  • Must now include a prominent risk warning on all financial promotions.
Payday loans neon sign

We can help you deal with payday loans

When people ask themselves “how do I get out of payday loans?” they’ll often think the answer is to pay one loan off with another. It’s not. This is an all too common problem that we see.

We know being in payday loan debt can be scary. If the repayment date looms and you can’t afford to repay, we can help. Follow these five steps to help deal with payday loans you cannot afford to pay.

Step 1: Don’t panic!

Payday loans are often advertised as a way of funding an unexpected ‘one-off expense’, like a car MOT. But the reality is four in ten people take them to pay for essentials like food and petrol – putting food on the table and getting to work.

A quarter of people take a payday loan to repay other credit. If you’re struggling with payday loan debt – don’t panic! You’re not alone. We can help you get out of debt without taking any more loans.

Step 2: Stop the borrowing cycle

The trap many people fall into is not being able to afford it in the first place, but feeling there’s no way out other than to take out another one…and another then another.

You need to stop the cycle! Constantly taking out loan after loan may seem like a fix to your problems – it’s not. By drawing a line under taking more loans you’ll stop slipping deeper into debt. You can deal with the debt that’s left by following the next steps…

Step 3: Cancel the CPA payday loan payment      

A payday loan is a non-priority debt. That means it should only be paid from money you’ve got spare once you’ve paid priorities like rent, mortgage, household bills, food and living costs. If paying back the payday loan means you’ll be short of money to pay priorities you should stop the money being taken.

When you applied for the loan you gave your card details to set up a continuous payment authority (CPA). This is how most payday loan company take the repayment.

However it’s a direct link to your bank and the payday lender can take the money whenever they want. If there’s not enough money to cover the full repayment they can try again and again.

If the money isn’t in your account you might get bank charges. So if you can’t afford it you should cancel the CPA. It’s easy to do:

  • If it’s the day the payment is due ring the bank asking them to cancel the payday loan payment
  • If it’s 1-5 days away email this template letter to the bank
  • If it’s more than 5 days away send the template letter to the bank by post
  • To keep them in the loop you should send a copy of the template letter to the payday loan company too. Do this after the bank has cancelled the CPA

Still unsure what to do? Read our article how to cancel a CPA on a payday loan. But come back here! There are still more steps to getting out of payday loans debt.

Step 4: Repay only what you can afford

One of the gripes people have over how payday lenders work is over their collection process. The truth is you cannot be made to repay more than you can afford. We can tell you how much that is and crucially we can help you prove that to the payday lender.

The easiest way to do that is to use our Debt Remedy tool.

What is Debt Remedy?

It’s our way of giving free debt advice online, to anyone who needs it. It’s a money management and debt solution tool that works out your options based on your budget. It’s quick, easy to use and you don’t have to give your name.

How do I use it?

  • You put in your income and outgoings
  • It then budgets payments like rent and bills (including arrears) to make sure the most important people and companies are being paid
  • Then it gives you a personal action plan to deal with all your debts including the next steps you need to take

Can I speak to someone?

Sure. If you’d prefer you’re welcome to ring and speak to one of our debt advisors.

Step 5: Live a life without payday loans

You’ve stopped the cycle of borrowing and retaken control. With our expert debt advice and budgeting help via Debt Remedy or on the phone you can manage your outgoings within your income, without the need to take more credit.

We can help you budget for priorities, clear any arrears, budget for future payments and then provide one of a range of debt solutions to manage your debt over the longer-term.


Very often people take payday loans because they’re desperate, but there’s a way out. By following the steps above and getting expert debt help from us you can live a life free from payday loan debt.

Tags Payday Loans
  • Sarah

    I currently have 3 payday loans and they are all due to go out on 28th May, Ive read about cancelling the CPA but if I dont pay it will that not get me into a much worse situation? If I do pay them Im going to have to take out more pay day loans straight away to last the rest of the month until my next pay day so im not sure what the best option is, I already have a terrible credit score so Im not to concerned about that its more about the charges i will get if i dont pay it. If I do make the payments next week on the payday loans then I wont have the money to pay off my 4 credit cards which all charge £12 each for non payments so either way im going to be worse off than I am right now even with all the pay day loans :/

    • moneyaware

      Hi Sarah,

      If you’re struggling with payday loans and can’t afford to make the payments without borrowing more money, this is often a sign that the situation could spiral out of control and become even more difficult.

      Cancelling the payments will allow you to look at what options you have to deal with the debts you already have without borrowing more money. I understand you’re concerned about the charges you could get if you don’t make the payments, but this is something that we’d be happy to discuss this with you and look at what solutions and advice are available.

      We speak to lots of people in the same situation as you and we know how difficult it can be.

      I’d recommend speaking to us as we can offer our free, impartial and confidential debt advice and solutions and we’ll also be able to talk to you about what to do next.

      All of our advice is free and based on what’s right for you, don’t feel like you have to struggle on your own.
      You can find out more about how to get in touch by visiting

      I hope this helps,


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  • Bills Bills Bills

    I see that you are trying to offer help to people, but here’s the problem: When a person contacts their bank to cancel a ACH payment, the bank charges $25 to $30 to do that. It seems people have left messages here describing how they have got tangled up in 2 or 3 payday loans- and they are all due. Well cancelling their ACH payment withdrawals would cost them anywhere from $75 to $90, THEN you suggest they still make some kind of payment to the payday loan companies, even if it’s a small one, to work things out with the payday loan companies. Since about $90 is what it would take to renew some of the payday loans, a person isn’t actually getting ahead. So my question to StepChange is this, isn’t there an actual law that a person can use to just completely put an end to repaying a payday loan without ending up in court with paying court costs, etc.

    • moneyaware

      Hi there,

      Thanks for your message. I’d firstly like to mention that MoneyAware is a UK-based blog and so the information we give in our articles and comments relates to debt law in the UK.

      Cancelling payments towards debts can lead to charges being
      added, but if the only way someone can make a payment is to borrow more money then this is often a sign that the debt is spiralling. Cancelling a payment gives people time to look at what their options are and to seek free and impartial debt advice as to how best to deal with their debt.

      We would encourage anyone struggling with payday loan debt to
      get in touch with us:

      As a charity our stance is that if you recognise that you owe a
      debt, you should take reasonable steps to deal with it. However there are certain debt solutions available to help people deal with unmanageable debt, which we discuss in more detail in this article:

      I hope this answers your question.

      Kind regards,


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