There have been plenty of casualties in the payday loan sector in recent times, as the regulators have tightened things up, and consumers have begun to see that they can find reputable payday loan lenders that won’t just provide them with a quick service that leaves no room for error and potentially places them in much greater danger of suffering long-term debts. If you have borrowed money from a payday loan lender that has gone into administration, or looks like it is in danger of going into administration it is important that you understand the process and have an idea of what to do next.

As payday loan companies such as Quick Quid go into administration, after the demise of WageDay Advance, Juo Loans, and Wonga, it is clear that there is a sea change taking place within the payday loan sector. I you are an existing customer of a payday loan company, what does it mean for you? How can you claim compensation? Or are you just looking for more information about this worst-case scenario before committing to signing up to a payday loan.

Once a payday loan lender goes into administration, they will cease to offer the services they previously have, so there will be no more payday loans given to customers. You should, however, be able to still access the management of an existing loan if you are in the process of repaying a loan to a payday loan company that has gone into administration. You do still need to repay the loan in these circumstances, with your regular payment schedule continued. If you fail to make a payment, or you are late, you are liable for the same potential fees and additional charges as you would under normal circumstances. It will also affect your credit score negatively.

If you have made a claim for compensation against your payday lender before they have gone into administration, you will become a creditor on the list that the administrators are working through. Once the business has been wound up and assets collected and collated, the creditors are paid in order of preference.

Once the administrators have been appointed the Financial Ombudsman Service (FOS) clarify the impact on compensation cases. You are not entitled to make a claim against the Financial Services Compensation Scheme (FCSC). If you are struggling to repay your debt due to your personal financial circumstances, you should secure debt advice through the administrators, in the same way you would seek debt advice from the payday loan company under normal circumstances.

If you are in need of an urgent injection of cash to help cover the cost of unexpected bill, or any scenario where you are short until next payday, but are sure you have the means to pay it back in full when that payday comes around, there are reputable payday loan providers out there to help you. An urgent payday loan helps people out of difficult situations all the time, and as long as you understand what it entails, and what you can do if that company goes into administration during your repayment period, you will be fully informed before making a decision.