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How Do I Resolve A Negative PayPal Balance?

Written by, Marija Petkova

Updated April, 7, 2023

How do I resolve a negative PayPal balance?

The short answer is that you can get out of a negative balance by putting money into your account.

 In this article, we’ll cover why that happens, how much time you have to pay back what you owe, and what else you can do. 

Read on. 

Can You Go Into Debt With PayPal?

Your PayPal balance can go below zero, especially if you’re not mindful of the funds you have in the bank account that’s linked to your PayPal account.

If you have a negative PayPal credit balance, it effectively means that you owe money to PayPal. 

Regardless of how this happened, you need to resolve the PayPal negative balance as soon as possible to avoid the possibility of dealing with a debt collection agency.

Worth noting: PayPal is a popular option for international money transfers. If you don’t have an account with any money transfer service, here’s everything you need to know to send money outside the UK and receive money to the UK from abroad.

Negative Balance on PayPal: What Are the Reasons?

There are two main reasons why you might be seeing a negative balance in your PayPal account.

Insufficient funds

In most cases, a PayPal account with a negative balance means that you’ve spent more than what you had in your account.  

This can happen if you make a payment without realising that you don’t have enough funds in your account or if you’ve set up automatic payments, like linking your PayPal account to a service such as Netflix. 

Note that PayPal will charge you a fee when you go over your balance.

Transaction reversal

Another reason for a negative balance on PayPal can be a transaction reversal. 

If you’ve received money from a buyer and they open a claim or file a chargeback because they’re unhappy with the purchase or they never got the goods they ordered, PayPal can temporarily hold the amount. 

If you’ve already taken out the money, then your balance will drop below zero. 

You may also experience a PayPal minus balance if a bank filed a reversal on your customer’s behalf. This often happens when the buyer’s bank account was used without their permission.

PayPal Negative Balance Consequences in the UK: What Happens If You Go Into Debt With PayPal?

If you get into debt with PayPal, you have 120 days to pay it back. If you don’t, PayPal will refer the case to a debt collection agency.

In the meantime, PayPal will likely limit your account. You will be able to receive funds, which will be applied to your outstanding balance, but you won’t be able to withdraw any money from your account. The company may also cancel any pending withdrawals.

If you can’t repay your debt, the best thing you can do is contact PayPal and explain your situation. They might be able to help create a payment plan. 

If PayPal doesn’t hear from you and more than 120 days pass since your balance dropped below zero, the company will lock your account (and you won’t be able to log into it) and send you a letter, informing you that a debt collection agency will take over your case. 

You’ll then be contacted by the PayPal-appointed debt collector agency.

The debt collector will initially try to contact you, using the details that are available to them through PayPal. They would usually reach out to you by post, phone, or email.

Ignoring the agency’s attempts at recovering the debt might prompt them to show up at your home. However, debt collectors rarely do this without notice. They’re required to inform you at least 7 days prior.

If you continue to ignore the debt collection agency or refuse to make repayments, the debt collector may take legal action against you. They can register a default on your credit file, issue a County Court Judgement (CCJ), and even petition you for bankruptcy (if your debt is over £5000).

How To Deal With PayPal Debt Collectors?

When a debt collection agency contacts you, you shouldn’t ignore them. 

A reputable debt collection agency will be able to provide you with all the necessary information you need about your debt, including details that would confirm whether the debt is yours and how you can dispute it.

The debt collector won’t automatically offer this information when they reach out to you, so it’s best to send them a verification letter to have this in writing.

After you’ve received the letter and verified that the debt is yours, you can check if the debt collector is willing to settle for a portion of the cost. If they refuse, ask whether they can set up a payment plan.

How Can I Resolve My Negative Balance?

In most cases, you can restore your balance by transferring funds into your PayPal account. 

You can add money to your PayPal account by:

  • Transferring money from your bank account.
  • Adding money from a debit card.
  • Sending a money order, cashier’s check, or personal check.
  • Calling PayPal’s collections department at 888-895-5705.

Note: The collection department line is open from 8:00 a.m. to 9:00 p.m. Monday through Friday and 8:00 a.m. to 4:30 p.m. on Saturdays.

Bottom Line

There are many reasons why you may see a negative balance in your PayPal account. In most cases, it means that you owe money to the company. 

The good news is PayPal gives you enough time to resolve the issue and pay back your debt. If you believe the company made a mistake, you can always reach out to them and ask them to fix it.

Frequently Asked Questions And Their Answers

How long can my PayPal balance be negative?

If you get into debt with PayPal, you have 120 days before the company locks your account. If you refuse to pay back what you owe, the company will refer your case to a debt collection agency.

Can a negative PayPal balance affect your credit?

Going negative with PayPal or missing payments on your PayPal credit card can prompt the company to report your behaviour to the credit bureaus, which will directly affect your credit score.

How do I resolve a negative PayPal balance?

The best (and oftentimes, only) way to bring your PayPal balance back to £0 is to transfer the amount you owe into your account.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.