What Is an Extended Payment Plan
An Extended Payment Plan (EPP) allows you to repay a payday loan in installments over 2-6 months without additional fees or interest. Many states require payday lenders to offer an EPP when requested. The lender cannot charge you extra for using the plan, cannot report you to collections while on the plan, and cannot require a new loan to repay the old one.
State EPP Requirements
States that require lenders to offer EPPs include: Colorado, Florida, Illinois, Indiana, Kentucky, Louisiana, Michigan, Minnesota, Oklahoma, Virginia, Washington, and others. Requirements vary: some states require 4 payments, others allow up to 6. Some require the lender to offer the EPP before the loan is due; others require it only upon request.
How to Request
Call your lender and say: 'I would like to set up an extended payment plan under [your state] law.' Be specific about the state requirement. If the lender refuses, file a complaint with your state's financial regulator or attorney general. Get the EPP agreement in writing before making any payments. Note the start date, payment amounts, and total number of payments.
If No EPP Is Available
If your state does not require EPPs, you can still ask -- some lenders offer them voluntarily. If the lender refuses, your options include: negotiating directly for a payment plan, revoking ACH authorization to stop automatic withdrawals, paying the loan and not renewing, or seeking help from a nonprofit credit counselor. In severe cases, the debt can be discharged in bankruptcy.
Frequently Asked Questions
Can the lender charge fees during an EPP?
In states that require EPPs, the lender cannot charge additional fees or interest during the plan. The total you repay should equal the outstanding balance (principal plus the original fee) and nothing more.
What happens if I miss an EPP payment?
Most state laws allow one missed payment before the lender can terminate the plan. If terminated, the full balance becomes due and the lender can resume collection activity. Make every effort to stay current on EPP payments.
Can I get an EPP more than once?
Some states allow one EPP per year; others allow one per loan. If you need multiple EPPs, it is a sign that the underlying financial problem needs a bigger solution -- consider credit counseling or bankruptcy.
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