I cannot repay my payday loan. What can I do?

If you cannot pay back a payday loan on time, there are rules for what the payday lender can do.

The lender is not allowed to give you a new loan until this one is paid off. This means you cannot get a new payday loan with the same lender to pay what you owe on your first payday loan.

The lender can charge you up to 2.5% interest each month starting the day after the loan was due. The lender can also do things like send your file to a collection agency or sue you in Small Claims Court.

If any of these things happen, try to talk to a non-profit credit counsellor. Or try to get legal help.

If you can only pay part of your loan amount back, you're allowed to do this. You do not have to wait until you've enough money to pay back the full amount. Any money you pay back reduces the amount you have to pay in interest.

Rules about contacting you

Most payday loans are paid back in a single payment. If you miss any part of the payment, your loan is in default. The payday lender can contact you to ask you to pay. For example, they can text, phone or email you, send you a letter, or speak to you in person. But they cannot contact you in a way that costs you money. For example, they cannot use collect calls or calls with long-distance charges.

Unless you ask them to call you at a different time, payday lenders are only allowed to contact you by phone or in person Monday to Saturday from 7 a.m. to 9 p.m., and Sunday from 1 p.m. to 5 p.m. They can contact you another way outside of these hours. For example, they can email or text you at 9:30 p.m.

Lenders are not allowed to contact you on statutory holidays or the Civic Holiday, which is the first Monday in August. Except by regular mail, they also are not allowed to contact you more than 3 times during any 7-day period.

Lenders are not allowed to threaten you or swear at you. They're not allowed to bully you into paying or harass you. For example, it's not OK if they come speak to you in person late at night.

And, usually, lenders cannot tell others that you owe them money. For example, they cannot post what you owe on social media or tell other lenders.

The payday lender cannot contact your friends, family, spouse, neighbours, or employer. They also cannot contact anyone else you know.

But lenders are allowed to tell credit reporting agencies that you owe money.