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Can You be Sued by a Payday Lender?

By July 18, 2022October 18th, 2022No Comments

Yes, a payday loan lender can take you to court and sue you. If they win, you will then be required to repay whatever the court has issued.

In the majority of instances, a payday lender will work with their borrower in an attempt to retrieve the money that they are owed. However, there is always the possibility that a payday lender could take you to court if you cannot or are refusing to pay, and no other resolution can be found.

It is far from ideal for the payday lender to sue you, as it is an expensive process and may not always result in guaranteed success on their part.

It is important to note that payday loan lenders can only take you to civil court, not a criminal court.

 

What are Payday Loans?

 

Payday loans are short-term, high-interest monetary loans and take place between a lender and a borrower. This usually occurs when the borrower is unable to seek this amount from banks or credit unions.

The majority of payday lenders charge very high interest rates, and in some states, this amount that they charge is not regulated.

Typically, there is a strict time period in which you are expected to pay back the loan. This lies between around 14 to 28 days.

 

What Happens if I don’t Repay my Payday Loan?

 

If you are unable to pay back the loan on time, then you will be charged high interest rates until it is paid back. However, there may be some instances where you simply do not have enough money in their account to pay towards the payday loan repayments. In these cases, where you cannot come to an agreeable resolution with the payday lender, then they may be left with no other option than taking you to court.

 

Can You be Sued by a Payday Lender?

Why Would I be Sued by a Payday Loan Lender?

 

Taking a borrower to court is always a last resort for a payday lender. Typically, they will try to work with you to come to an agreement which means you will be able to pay off the loan, such as a rollover.

It is likely you will be sued by a payday lender if there is no cooperation from your part, or in instances where you are unable or willing to repay the payday loan

Payday lenders will take borrowers to court in a lot of cases where the above takes place, no matter the amount of money owed, even if it is a relatively small sum.

 

 

What Happens if I Get Sued by a Payday Loan Lender?

 

If you do get taken to court by a payday lender, it is especially important that you show up and do not ignore it. If you find yourself completely unable to repay the payday loan, then you may be able to claim bankruptcy and go on to prove this in court. Bankruptcy however is only appropriate in certain instances, and you should always seek the advice from a financial professional prior to claiming this.

If borrowers do not show up, it is likely that the payday lender will automatically win the case.

 

What Happens if my Payday Loan Lender Wins the Court Case?

 

If you cannot pay off a payday loan and your lender wins the court case, the most likely outcome of this is wage garnishment. It is important to note that even if you do lose the case, you will not be put in jail as the case will take place in a civil court, not a criminal court.

Wage garnishment refers to when your employer holds back a legally required portion of your wages that will go towards paying off the outstanding debts. Each state will have different procedures in order to carry this out, and some states may even provide exemptions from wage garnishment. Further, under federal law, certain benefits and payments are actually exempt from wage garnishment.

 

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