Can I Go To Court If I Don’t Repay My Payday Loan?

Author · Modified on 14 September, 2022

Yes, if you fail to repay a payday loan you can be taken to court by a lender. A payday lender can decide to take you to court if you fail to meet your agreed upon loan repayments.

However, before this, a lender will often attempt to obtain the money that you owe via a scheduled repayment system that is beneficial to both parties.

Taking a client to court is usually a last resort for a payday lender, as it will incur legal fees and doesn’t always result in a positive outcome for the lender.


Key Points:


  • It is possible to be taken to court by a lender if you fail to meet the terms you agreed to in your loan contract.
  • 25% of loans are rolled over due to difficulty meeting repayments, hence court action is a last resort for lenders.
  • Before threatening legal action,  your lender will withdraw funds from your bank account, if you’ve granted them access in your agreement.
  • You could rollover your debt, meaning you delay repaying it. This will add a further fee of around $45 each time you defer payments.
  • You should communicate with your lender and discuss elongating your repayment plan, for example, to make it easier to pay off.
  • You will not go to prison for unpaid payday loans, so you can have peace of mind in this respect


If you are summoned to court, make sure that you show up! In many cases, lenders automatically win cases, because clients do not attend court.


Can a Payday Lender Take You to Court?


Yes, you can be taken to court if you fail to repay a payday loan. Lenders can sue their clients to collect the money you fail to pay it back to them.

Legal action, however, is typically a last resort for lenders. With 12 million Americans using payday loans every year, extending legal action for all of those borrowers who can’t make repayments would be a massive headache for lenders. That’s why they will do their best to get their money back without initiating a legal battle.

Even so, it’s not unheard of for unreliable borrowers to have legal action taken against them. If you don’t dispute the lender’s claim, or if they win regardless, a judgment or order will be entered against you by the court.

Therefore, it is important to only borrow what you know that you can afford to repay. Before submitting requests for loans from payday lenders, it’s vital that you read the terms of the loan, and what will be expected of you as a borrower, before going ahead with a loan.


What Will Happen If I Am Summoned To Court For Not Repaying My Loan?


If you are summoned to court, make sure that you show up! Never ignore the lawsuit and turn up in court when you have been asked to do so.

In many cases, lenders automatically win cases, because clients do not attend court. No matter your circumstances, it is always in your best interest to show up to a court date.

Lenders don’t just go to court over large cases, lots of lenders will be willing to go to court over relatively small amounts of money. You shouldn’t be surprised if your lender takes you to court over a relatively small loan.


What Happens If You Don’t Repay a Payday Loan?


Defaulting on your payday loan can drain your bank account, trigger wage garnishment, collection calls and lawsuits. Once the agreed loan period has passed the lender who you borrowed from will continue to seek any unpaid amount on your loan.

The payment lender will set up automatic withdrawals from your account, attempting to regain as much for their loan as possible. This can result in bank fees for you.

If this is unsuccessful, your lender may set up wage garnishment, which involves a part of your paycheck being withheld, and going directly to the lender to repay your loan.

Also, during the time in which your loan is not being paid, it will still be accrediting interest.




What Should I Do If I Don’t Have The Money To Repay My Loan?


You should never take out more money in the first place that you know that you will be able to afford to pay back when the repayment is due. Note that a payday loan should only really be a short-term fix for an unexpected bill, or just to tide you over before the next payday.

However, as soon as you realize you will be unable to meet a scheduled loan repayment, you should contact your lender. A lender will always try to reach an agreement that makes it possible for you to repay the loan. You may be able to arrange a payment schedule that would be more affordable and avoid a visit to court.

You could also talk to your lender about rolling over your debt. This allows you to pay a fee to delay paying off your debt. However, this adds a cost (normally of around $45) to the already expensive act of taking out a loan.

Being unable to repay a loan can be an incredibly stressful situation. If you still need to pay rent and put food on the table for your family that has to come first. In situations like this, it is advisable to seek advice from a nonprofit credit counsellor, bankruptcy attorney or legal aid centre about your next moves.

If you are unable to repay your loans, there is the possibility of claiming bankruptcy. Claiming bankruptcy is something that should be talked over with a professional and will only be appropriate in certain situations.

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