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 $400 payday loan. The winning amount is $567.91. I won’t be able to pay that much and still pay my bills. The monthly payment is $170.45, which I can’t afford either. The total balance will be $2,045.40.

I spoke with a consumer credit counselor. They said don’t pay it and let it go to collections. I’m afraid they’ll call my family. I don’t want them to know. Can I do something so they don’t contact my family?

-A.

Dear A.,

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

The lender may already be in contact with your family members. When you take out a payday loan, you often need to provide references that the lender can contact in the event of a default. But lenders may also start calling your family members and friends, even if you haven’t included 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 debt collectors to call non-spouse family members if they’re trying to locate you, but they can’t discuss your debt. They are also prohibited from saying they work for a debt collector unless asked to do so.

However, the FDCPA only applies to third-party debt collectors, not original creditors. Most payday lenders attempt to collect overdue loans internally before sending them to a collection agency. So there is a good chance that the lender who gave you the loan is still trying to collect it.

Some states have laws that place additional limits on collection efforts. You may want to ask your credit counselor if your state laws provide additional protection.

Knowing your rights can be helpful, but let’s face it: the payday loan and debt collection industries are notorious for their sketchy tactics, so even though there’s a law that limits who a collector can contact, don’t don’t assume he’ll follow her. .

Here’s where thinking like a debt collector might come in handy. A collector has one goal, which is to get paid. The more pressure they exert, the more likely you are to pay. Even when they supposedly call family just to locate you, they know a lot of people are embarrassed by their debt and will agree to just about anything once the calls to relatives start.

Don’t play the shame game. Pick up the phone when the lender calls you so it’s clear they have your correct contact information. Be firm about your inability to pay at this time. Avoid showing emotions or divulging details about your personal situation, as this will be used against you.

As for your family, you don’t owe them an account of your finances just because a payday lender calls you. You might say something vague like, “Thank you for letting me know. They called me too. I always try to get to the bottom of things. If they contact you again, I would appreciate it if you would tell them I don’t live with you and ask them to stop calling.

None of this is technically wrong. I have no idea how curious your family is, so I can’t guarantee this will satisfy curious minds. But as long as this debt does not concern them, they are not entitled to more information.

I’m glad you consulted with a credit counselor before deciding to let this loan go to collection. If you have to choose between rent and paying off a payday loan, rent is the winner by far. But make sure you have taken into account all the consequences of a breach.

Once that account is cashed out, you probably won’t be able to take out a payday loan or any other type of credit for at least two years. Obviously, you’ve learned the hard way that payday loans are best avoided. But I guess you applied for a payday loan because you had no alternative. You will therefore need to think about what you would do if you had to face another unexpected expense.

If you can save even a small amount of money, it’s worth asking if the lender would be willing to pay. A tactic that sometimes works is to tell the lender that you are considering bankruptcy. Because creditors must cease collection efforts when you file, they may be willing to settle for less.

Either way, don’t be fooled by the threats you might encounter. You will not be arrested for this debt and your SSI benefits cannot be garnished. Most importantly, don’t let them convince you to turn that debt into a new loan. This will only trap you in an endless payday loan cycle. The damage caused by this loan may be unavoidable, but make it your goal to never go back to this predatory system.

Robin Hartill is a Certified Financial Planner and Senior Writer at The Penny Hoarder. Send your tricky money questions to [email protected].