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...

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.

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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 collectors, not 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.

Knowing your rights could be helpful, but let’s face it: The payday loan and debt collection industries are notorious for sketchy tactics, so even if a law exists that limits who a collector can contact, don’t assume that they’ll actually follow it.

Here’s where thinking like a bill collector could be helpful. A collector has one goal, which is to get paid. The more pressure they exert, the more likely you are to pay up. Even when they’re purportedly calling family just to locate you, they know many people are embarrassed about their debt and will agree to virtually anything once the calls to loved ones begin.

Don’t play into the shame game. Pick up the phone when the lender calls so that it’s clear that they have your correct contact information. Be firm about your inability to pay right now. Avoid showing emotion or disclosing details about your personal situation, as it will be used against you.

As for your family, you don’t owe them an accounting of your finances just because a payday lender calls. You could say something vague like: “Thanks for letting me know. They’ve called me too. I’m still trying to get to the bottom of it. If they contact you again, I’d appreciate it if you tell them I don’t live with you and ask them to stop calling.”

None of that is technically false. I have no idea how nosy your family is, so I can’t guarantee that this will satisfy inquiring minds. But as long as this debt doesn’t affect them, they’re not entitled to more information.

I’m glad you consulted with a credit counselor before deciding to let this loan go to collections. If you have to choose between rent versus repaying a payday loan, rent is the hands-down winner. But make sure you’ve considered all the consequences of defaulting.

Once this account goes to collections, you probably won’t be able to take out a payday loan or any other type of credit for at least a couple of years. Obviously, you’ve learned the hard way that payday loans are best avoided. But I’m guessing you sought a payday loan because you had no alternative. So you’ll need to think about what you’d do should you encounter another unexpected expense.

If you can spare even a small amount of cash, it’s worth asking if the lender would be willing to settle. One tactic that sometimes works is to tell the lender you’re considering bankruptcy. Because creditors have to cease collection efforts when you file, they may be willing to settle for less.

No matter what, don’t be fooled by the threats you may encounter. You won’t be arrested for this debt, and your SSI benefits can’t be garnished. Most importantly, don’t let them convince you to roll this debt into a new loan. Doing so will only trap you in a neverending payday loan cycle. The damage from this loan may be unavoidable, but make it your goal to never return to this predatory system.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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