They may or may not report you to the credit reporting agencies that is up to them. You should see a debtor's rights attorney to consider initiating your own action against the compay under the Fair Debt Collection Practices Act. Find a legal services agency or call a state or county bar association for a referral.
This answer is provided for informational purposes only. Actual legal advice can only be provided in an office consultation by an attorney licensed in your jurisdiction, with experience in the area of law in which your concern lies.
Payday loans are illegal in North Carolina. A payday lender that is collecting on its illegal loan may be breaking North Carolina's debt collection laws. A collection agency that collects on an illegal payday loan on behalf of a lender may be breaking both North Carolina's debt collection laws and the federal Fair Debt Collection Practices Act (FDCPA).
The FDCPA allows consumers to sue collection agencies for illegal collection activity. Consumers who win their cases may receive up to $1,000 in statutory damages, as well as actual damages. Additionally, North Carolina law provides for up to $4,000 in statutory damages per violation, plus actual damages. North Carolina consumers facing collection or credit reporting on an illegal payday loan should consult an attorney for assistance making a claim.
(This response does not constitute legal advice and does not create an attorney/ client relationship. The response is in the form of legal education and is intended to provide general information about the matter in question. Many times the questioner may leave out details which would make the reply unsuitable. The questioner should confer with an attorney about the specifics of their case.)