Will Debt Collectors Call My Family Over Delinquent Payday Loan?

Dear Penny,

I’m on Supplemental Security Income (SSI) and my car broke down. I needed extra money to pay my rent, so I took out a payday loan for $400. The payoff amount is $567.91. I will not be able to pay that much and still pay my bills. The monthly payment is $170.45, which I also can’t afford. The total balance will be $2,045.40.

I talked with a consumer credit counselor. They said not to pay it and let it go to collections. I’m worried that they will call my family. I don’t want them to know. Is there anything I can do so they won ‘t contact my family?


Dear A.,

I’m afraid you probably can’t stop the payday lender from contacting your family. If you’ve defaulted on this debt since you wrote me, you’re no doubt being bombarded with calls and texts.

The lender may already be contacting your family members, as well. When you take out a payday loan, you’re often required to list references whom the lender can contact if you default. But lenders may also start calling your family members and friends, even if you didn’t include them as a reference.

The rules for these communications likely fall into a gray area. The Fair Debt Collections Practices Act (FDCPA) is a federal law that governs debt collection practices. The law only allows collectors to call non-spouse family members if they’re trying to locate you, but they can’t discuss your debt. They’re also prohibited from saying that they work for a debt collector unless asked.

However, the FDCPA only applies to third-party debt collectorsnot to original creditors. Most payday lenders attempt to collect delinquent loans in-house before they send them to a collections agency. So odds are the lender that gave you the loan is still trying to collect on it.

Some states have laws that place additional limits on collection efforts. Perhaps you could ask your credit counselor whether your state’s laws offer an extra layer of protection.


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