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.

Remember…

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
  • Bill Evans

    My Daughter whilst at UN 0iversity with NO income took out a pay day on-line loan but didnt pay anything or tell anybody for six months .My wife and me have only JUST found out when we opened a letter to her by mistake. The debt has accumulated from 2,000 to 5,000 and we have only just found out. What is the best way forward?

    • moneyaware

      Hi Bill,

      Thanks for your message. I’d recommend your daughter gets in touch with us for free and impartial debt advice. We’ll be able to have a look at your her finances in more depth and discuss with her the best options for her to deal with her debt.

      Your daughter can do this using our online Debt Remedy tool, which can be found here: http://www.stepchange.org/Debtremedy.aspx She’ll need to have details of her debts, income and expenditure to hand, and
      it usually takes around twenty minutes to complete.

      Alternatively she could give our helpline a call on 0800 138 1111 to speak to an advisor. It’s free to call from landlines and most
      mobiles, and is open from 8am to 8pm Monday to Friday and 8am until 4pm on Saturdays.

      I hope this helps.

      Kind regards,

      Laura

      • Bill Evans

        Hello Laura,

        I will tell my daughter and hopefully she will, for once, take advise on how to proceed. This is a worry though and thats a fact.

        Rgds

        Bill Evans

      • Bill Evans

        Thank you for replying. Yes, I think you ARE right! My daughter has so far failed to REALISE that is KNOW she is in debt and owes money!

        I believe that what you say is perhaps a way forward, perhaps even a solution as we all appear ready to accept advise from third parties rather than mothers or fathers.

        I think my better half is TOO confrontational with my daughter so I have always tried to take a more low key even moderate approach. Only ONCE, about two years ago when she was 17, did I actually become physical with the girl- this was when she took on a GBP400 Wonga loan which my wife paid off when Wonga wrote (And we then discovered) had accumulated to GB550.

        Could you please adviseyour preferred phone number after which I will try and have my daughter call. It’s a long shot but I am more than willing to give it a try.

        Rgds

        Bill Evans

      • moneyaware

        Hi again Bill,

        Our phone number is 0800 138 1111 – it’s free to call from landlines and most mobiles and is open from Monday to Friday from 8am to 8pm and Saturdays from 8am to 4pm. It’s important to remember that with patience and the right advice, we will be able to help your daughter.

        If you’re finding this is affecting your relationship with your daughter or other family members, you could also have a chat with the charity Relate. You can find their contact details here: http://www.relate.org.uk/about-us/contact-us

        Kind regards,

        Laura

      • Bill Evans

        Hello again Laura,

        In my last reply, I MAY have implied my daughter was the subject of a violent attack. NOTHING could be further from the truth. My two children have been brought up with the absolute minimum of physical hurt! Family relations are presently strained but a very long way from breakdown,

        My boy (18) is going through the phase of implying I should FO as he can do everything himself. Clearly he has a great deal to learn. He has turned himself around at school (The teachers have called him an inspiration to others) and is on course if he continues, to become a Chemical Engineer. He is a bit of a tight-wad and can handle money.

        At nearly 21, my daughter is reasonably well behaved but has no idea of money values or the art of saving for THAT rainy day- which ALWAYS comes. She DOES have positive values though- as of this moment I havn’t seen her for two days since she is working as a carer with BUPA at Elstree and so starts early and finishes late. Peanuts salary mind you. She really does work when asked to.

        I will try to have her phone the number you give- if I fail to get her to do this then I will advise so we don’t waste your time! Our biggest fear is that my daughter will, by default, get herself a CCJ or similar which then totally excludes her from a educational grants etc. She is young enough to harm herself for life.

        Rgds

        Bill Evans

      • Bill Evans

        Hello Lauta,

        Thank you taking the trouble to reply. I am afraid the situation has become worse, if that was possible.!
        We have discovered that my daughter LIED to Htachi when she took the GBP2,500 loan by saying she was working. The truth is that hse was attending Uni and so had no income. On top of that, we have had ANOTHER short loan has flopped into our letterbox this time for GBP550. I have forved her to pay GBP100 so this loan is on the way to being settled, but clearly my daughter has to be closely monitored!
        I have said to my daughter it is likely she has borrowed money from others as yet unknown. What has been a small can of worms is now a Giant–size tin of >>>>>! We do not know with any certanty quite where we stand and what MAY be coming in per post.
        For Hitachi, my daughter has paid GBP150 (Of the GBP5,500) and they have agreed with her she MUST pay this sum for the next six months after which they MAY review the situation once again. This is not satisfactory but as my daughter is saying thins like :It’s only GBP500″, she clearly has NO idea or implication of how to deal with debt.
        Any comments you have would be welcomed.

        Rgds

        Bill Evans
        ——————————————–

      • moneyaware

        Hi Bill,

        I’m sorry to hear the situation has become worse, and I understand this must be stressful for you too.

        From what you say, it sounds as though your daughter hasn’t yet acknowledged that she’s in debt. This is the first step to dealing with debt, and it’s not an easy step to take.

        As you are discovering your daughter has more debt than was first thought, it’s important that she gets in touch with us – details of our phone number and opening times are in my first message. Our debt advisors are professional and non-judgemental, and will be able to advise her as to the best ways to deal with the debt.

        If she’s not in a position to give us a call, she can ask us to give her a call back at a suitable time for her using this form on our website: http://www.stepchange.org/Contactus/Requestacallback.aspx

        If you would like to give us a call on her behalf then
        that is fine too, but we would need her to give us permission to speak to you on her behalf first.

        I hope this helps.

        Kind regards,

        Laura

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  • Roxanne

    I am in debt with several payday loan companies, I’m 19 and I am terrified.
    I have missed payments and I can’t afford to pay them back, I don’t get my student finance until January and my part time job isn’t enough to cover the costs. If I use Step Change, will I be Blacklisted? Will it stop me from getting a mortgage etc in the future?

    • moneyaware

      Hi Roxanne,

      Thanks for your message. It’s understandable that you’re finding your situation scary, but please try not to worry. We advise people in a similar situation to you every day and this is something you have to deal with alone.

      You won’t be blacklisted for getting in touch with us – although it’s a common misconception! There’s no ‘blacklist’ as such, but if you default on payments to your creditors, it’ll be recorded on your credit file. As lenders use this to determine whether or not they will
      lend you money, it could affect their decision if you ask to borrow money again in the future. However your credit file is a bit like a conveyor belt, and most things recorded on it will drop off after six years. I’d recommend you deal with this debt sooner rather than later, and then look to build up your credit file once you’ve cleared the debt.

      As you mention you’ve fallen behind with payments to your creditors, I’d suggest you get in touch with us for free debt
      advice. One of our advisors will have a chat with you about your financial situation, work out a budget with you and talk you through the best options for dealing with your debt. You can call our helpline on 0800 138 1111 from Monday to Friday from 8am until 8pm and Saturdays from 8am until 4pm. It’s free to call from landlines and major mobile networks, including Orange/EE, O2, Vodafone, T-Mobile, Three, Tesco Mobile and Virgin Mobile.

      I hope this helps.

      Kind regards,

      Laura

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  • James Luios

    Do you need 100% Finance? I can service your financial need with less payback problem that is why we fund you for just 3%. Whatever your
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  • James Luios

    Hello all,

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    Contact us with the above details on our email: luiosjames@hotmail.com

    Regards to you all.

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    Our quick cash loans are available to those that need money fast. We have short-term style loans, all the way up through installment loans, and many in the middle. We can help take away the stress and helpless feelings that often accompany not being able to pay your bills. Overdraft fees, and mounting late fees, can quickly overtake your finances and ruin your ability to make ends meet. That’s what short-term style loans are for. Most of the time, you’ll get your response from your application in seconds or minutes, and then can get the money you need put into your account the following business day. Contact us today via email;crystalclark_financialhome007@yahoo.com for more information about our loan programming and regulation.

    Thanks,

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    I am Elvin Morrison, a Private Money Lender do you need a loan to start up business or to pay your bills and a corporate financial for real estate and any kinds of business financing. I also offer Loans to individuals,Firms and corporate bodies at 2% interest rate. I give out loan to serious minded people that are interested of loan if interested contact this email: elvinloancompany@yahoo.com

  • timothy candy

    Hello everyone my name is Timothy candy, am here to testify how i was scammed by various loan lender from this site.I was in need of a loan and i applied from various loan lenders from this very site.They asked me to pay some amount of money at different basis but i never get my loan.This was how i lost the sum of 5000USD .I was now in debt because i borrowed the money from a friend.One day a friend of mine introduce me to William paul.He told me how he has helped him with loan at several cases without any delay.I was scared and never believe him.He urge me to trust him,this was how i was introduce to him through his email{williamfinance@hotmail.com}.He told me he will offer me the loan that i only need to comply with them.I did as he told me and without any delay,i received my loan as he earlier promise. Am here to tell you that most of the loan lenders in this site are scammers. If you truly need a genuine loan please meet William Paul through his email williamfinance@hotmail.com.He is a registered reliable loan lender.

  • oliver

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    because he is the most understanding and kind hearten lender.

    thanks you all for listening,

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  • monica carlos

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