Can A Payday Loan Company Take Me To Court?

Yes, you can be taken to court by a payday loan company if you default on your payday loan repayments. This action is usually only taken as a last resort, but payday lenders do have the legal right to pursue repayment through the court system if you fail to honor the terms of your loan agreement.

Ready Payday Loans is here to help you understand the potential legal implications of failing to repay a payday loan, and discuss steps you can take to reduce these risks and stay on top of your loan repayments.

What Are The Consequences If I Cannot Repay My Payday Loan?

Payday loans can offer a quick fix for financial emergencies, but if you cannot repay your payday loan there can be serious consequences, including legal action. 

You may incur additional fees and interest charges, which can be an additional worry during your financial difficulties. Defaulting on a payday loan can also be damaging to your credit score, you could face collection efforts from debt collectors and potentially be taken to court by the lender. 

With a bad credit score, you will find it more challenging to take out a loan in the future or be presented with more expensive loan offers.

Why Might I Be Unable To Pay Back My Payday Loan?

When you take out a payday loan, you agree to repay the borrowed amount, along with fees and interest, by your next payday.

However, unexpected circumstances such as job loss, medical emergencies, or other financial hardships can make it challenging to meet these obligations.

If you become aware you will struggle to meet your loan repayments, you must communicate this with your lender immediately. Together, you may be able to come up with an alternative repayment plan that is more affordable and saves you from serious action being taken.

What Will A Lender Do If I Miss My Payday Loan Repayments?

If you’re unable to repay your payday loan on time, the lender may initiate a series of actions to recover the debt. This may include contacting you via phone, email or mail to discuss repayment options. 

However, if these efforts are unsuccessful, the lender may escalate the matter and pursue legal action against you.

What Legal Action Can A Payday Loan Company Take?

One of the most common legal actions taken by payday loan lenders is filing a lawsuit against the borrower. If you fail to repay the payday loan according to the terms of the agreement, and do not cooperate when contacted, the lender may take you to court to recover the outstanding debt.

If the lender is successful in court, they may obtain a judgment against you, requiring you to repay the loan plus any additional fees and interest accrued. This judgment may also impact your credit score and could result in wage garnishment or asset seizure if you fail to comply with the court’s orders.

In some cases, lenders may choose to sell the debt to a collection agency if they are unable to collect payment themselves. Collection agencies are known for their aggressive tactics, including incessant phone calls, letters and even threats of legal action.

What Should I Do If I Am Taken To Court By A Payday Loan Company?

If you receive notice of a lawsuit for unpaid payday loans, you must take prompt action. Ignoring the summons or failing to appear in court can result in a default judgment against you. 

Instead, seek legal advice from an attorney who can help you understand your rights and explore potential defenses.

How Can I Avoid Going To Court For Missed Payday Loan Repayments?

If you’re struggling to repay your payday loan, there are some proactive steps you can take to retain some financial standing and reduce the risks of legal action. Here are some steps to consider:

• Contact Your Lender: If you know you will have difficulty making your loan payments, reach out to your lender as soon as possible. Many lenders are willing to work with borrowers to establish a repayment plan that fits their financial situation.

• Consider Debt Relief Options: Depending on your financial situation, you may be eligible for debt relief options such as debt settlement or, with professional guidance, bankruptcy. These options can help you discharge or reduce your payday loan debt and provide a fresh start financially.

• Create a Budget: Going forward, create a budget and financial plan to avoid falling into the payday loan trap again. This may involve cutting expenses, increasing income and building an emergency savings fund to cover unexpected expenses.

Court Action As a Last Resort

Defaulting on a payday loan can have serious consequences, including lawsuits as a last resort. However, by taking proactive steps to address your difficulty in meeting repayments and communicating openly with your lender, you can reduce the risks and work towards resolving your payday loan debt.