Unfortunately, you can go to court if you fail to meet loan repayments. If you don’t repay your payday loan, you could end up in court, if your lender decides that is the route they want to go down to secure the money they’re owed.
Commonly, payday lenders attempt to obtain the funds they’re owed through means which are beneficial to both you and themselves. However, if no solution can be reached between both parties, you could potentially be taken to court by the lender as a last resort.
Here, Pheabs explores some of the most commonly asked questions around this subject, including:
- What will happen if I don’t repay my loan?
- What should I do if I have no money and can’t repay?
- What happens of I am summoned to court?
Before taking out any type of loan, it’s important to make sure you fully understand its terms, and are confident that you can keep up with repayments. Ensuring this can help to avoid going to court over the matter.
What Will Happen if I Don’t Repay My Loan?
Defaulting on your payday loan may lead to multiple actions. This includes a negative impact on your credit score, wage garnishment, lawsuits, and being called by debt collectors. While very rare, jail time has also been given for failure to repay money owed.
Following the agreed loan period, the lender may implement one or more of these actions in an attempt to obtain any unpaid funds. They may instigate automatic withdrawals from your bank account, which could result in bank fees for yourself. If this proves to be unsuccessful, they could set up wage garnishment. This would involve a portion of your wages being withheld and then sent directly to your lender. For the duration of time that your loan hasn’t been fully paid back, it will still be accrediting interest.
What Should I Do if I Have No Money and Can’t Repay?
As soon as you realize you will be unable to meet a scheduled loan repayment, 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.
It can be incredibly stressful when you find yourself unable to meet your loan repayments. You may become worried about how you will support yourself or your family financially. There are nonprofit credit counselors, bankruptcy attorneys, or legal aid centers that can help you find out more about your options and plan for a better and brighter financial future. In certain situations where you are unable to repay your loans, claiming bankruptcy may be a relevant possibility. Declaring bankruptcy should always be discussed with a professional.
Can I Be Taken to Court if I Can’t Repay My Loan?
Yes, you can be taken to court if you fail to repay a payday loan. Lenders can usually sue to collect the money you fail to pay back to 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.
It’s important to only borrow what 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 Happens if I Am Summoned to Court?
A lender will try to create an alternative payment arrangement that suits both of your needs. If a lender can find no alternative or you are uncooperative, they may take you to court. While this acts as a last resort, lenders will bring small and large cases alike to court to get the money they are owed. Don’t be surprised if your lender takes you to court over a relatively small amount of money.
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.