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What exactly happens if you do not pay back a payday loan?

Austin, TX |

I took out a payday loan and received a call from an office saying I would be charged with "check fraud" if I did not pay the $350 dollars in 24 hours. I told them I would like something in writing before I gave them my credit card number or any other information over the phone; the woman I was speaking to said that once the payment was "secured" with my credit card number, I would receive information in writing. I just want to see what the consequences of this could potentially be; she is acting like this will be some kind of criminal proceeding, as though I will be taken to court and possibly jail; I was under the impression that I could not be arrested for this. I have no problem paying my debt but cannot do so right away, as I explained to her.

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Attorney answers 4


In most states, payday loan companies can collect in civil court by suing you for the debt.

Oh yeah, and the call you so often that you want to blow up your phone.

BTW, do you understand how interest on these debts compounds? The size of the debt can triple in just a few months!

Hope this perspective helps!


Cancel the credit card to prevent the problem from compounding. Post dated checks are treated as loans, not checks in most jurisdictions. It is likely the collectors violated collection laws by making a threat of criminal action.


They might try to have you charged in Justice of the Peace court with an issuance of a bad check (IBC) charge. The violation has some technical aspects that may or may not apply to your case.

Basically, if you can't pay, you can't pay. You have no control over what they do in response to that. If they file a charge, get a lawyer. Otherwise, don't worry about this until you're in a situation to change it.


It is a criminal offense in Texas for a person to write a check if the person knows his or her account lacks sufficient funds to cover the amount of the check. However, along with a few of my other colleagues, I don't believe I know of one Texas district attorney who prosecutes payday loan customers under Texas' hot check law. I believe TPC 32.41 Issuance of a Bad Check, is the relevant provision. The foregoing is just my personal thinking.

The DA must prove that (i) the customer knew he or she did not have the funds at the time the check was written; and (ii) the customer must have known there would not be sufficient funds in the account at the time the check would be cashed.

In any case, I would locate a Texas Consumer Law attorney (many have free consultations). Texas criminalizes threats of violence or harm on the party of a payday loan company trying to collect a debt. Debt collectors cannot imply that a borrower has committed a crime or misrepresent the amount of the debt. In addition, the Texas Attorney General can file both criminal and civil charges against violators of Texas Debt Collection laws. Get the facts straight from a local lawyer.

I also attached a link that may be helpful. Best of Luck.

The posting attorney is admitted to the U.S. Tax Court and authorized to represent clients in all 50 states before the IRS. Outside of IRS matters, the posting attorney is licensed to practice law generally in the State of Texas and no other state. The information provided in this post is for general educational purposes only and should not be relied upon as legal advice by any party. No attorney-client relationship is formed with any party by the mere posting (or reading) of this information on the AVVO website. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency