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Did I Make a Mistake by Agreeing to Pay an Old Payday Loan?

Written by Steve Rhode


Dear Steve,

Payday loan from four years go went unpaid and was sent to collections. When I talked to the debt collector I asked for a letter or something in writing and he said they couldn’t mail me anything because they tried doing that already, but the address they sent the info to was an old address. Not even the address I used for the loan. I ended up agreeing to an installment pay meet plan which equals twice the original loan amount. The conversation was recorded after I agreed.

I have already made one payment. Should I continue to make the other two payments or take my chance with the lawsuit?



Dear Katara,

Well the damage has been done at this point. By agreeing to the payment and acknowledging the debt you may have just reset the statute of limitations clock on this old debt. If so, depending on the statute of limitations in your state, this may have given the collector or creditor a right to sue into the future.

But there are a couple of issues to consider. The first is if this was an online loan and if the lender is licensed in your state to make loans to begin with. Many online payday loans have been ruled uncollectible because the companies were not properly registered to do business or lend. If it was a storefront lender then the chances are much higher they are a licensed lender.

But if this debt is part of a larger financial situation, then bankruptcy might be a better consideration for a fresh start. A consumer bankruptcy would most likely eliminate the payday loan and other unsecured consumer you may have.

Rather than just not pay and open yourself up to a possible suit, judgment, and wage garnishment, you might want to talk to a local bankruptcy attorney and learn what debt relief solutions are available. A bankruptcy would stop the need for any further payments on this payday loan.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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