Skip to main content

Last Updated on March 18th, 2024 at 05:25 pm

Yes, if you fail to repay your payday loan for a long time and do not communicate openly with the lender, there is a chance that they might sue you in order to collect their losses.

You need to remember that when you take out a payday loan or installment loan that you are agreeing to borrow $300 or a higher amount and confirming this when you sign their contract. When you do not pay back your loan or delay repayment, the lender will want to recover their losses.

If you miss a repayment are in touch with the lender regularly, make partial payments or set up some kind of repayment plan, this is perfectly fine. But if you avoid any communication with the lender, miss phone calls, do not respond to emails, avoid letters and more, the lender could eventually try to sue you or take you to court to get their money back.

When a payday lender attempts to sue you, it is purely as a way to recover their funds. It is not their first port of call, but rather a last resort. In fact, upon receiving this summons, you could get in touch and make a payment, either partial or full and it will drop the lawsuit pretty much immediately.

Otherwise, you could find yourself in court with the payday lender and because the agreement is legally binding, the chances are that the judge will require you to pay back the money and even have to sell off items immediately to cover this – or the lender could potentially cease things you own too.

Just in short, if you are struggling with payment, you should speak to the lender as soon as possible and run through your different options. They are trained to do this and to help you, so you have nothing to worry about!

Not to mention, delaying payments has a number of negative effects, including an increase in the cost of the loan (interest and late fees will start to add up big time!) and it will cause your credit score to fall which will make it harder to get credit and affordable loans in the future.

In Short:

  • If you miss repayments for a payday loan and fail to respond to the lender, they will use different measures to chase you up, including phone calls, emails, letters and more
  • Eventually, they might take you to court or try to sue you to recover their losses – but this is more to get a reaction out of you
  • If you can pay off the debt either in full or partially, this will drop the law suit
  • Failing to respond after missing a repayment can cause the cost of your loan to skyrocket and negatively impact your credit score


Can Payday Lenders Sue You?

Yes, a payday lender can take you to court and, if they win, you will be required to repay whatever the court has issued. Payday lenders will work with clients in an attempt to secure the money they are owed in a way that is in the best interests of both parties.

There is the possibility that a lender could take you to court if no other resolution can be found. Taking a client to court will always be a lender’s last resort, as it is expensive and not always successful for the lender.

Not repaying your payday loan could result in a number of outcomes, including a negative impact on your credit score (making it harder for you to borrow money in the future), wage garnishment and debt collectors, however, it is incredibly unlikely that you will go to jail for not repaying your loan.


What Happens if I Get Summoned to Court?

Taking you to court will always be a lender of last resort, wherever possible your lender will try to arrange a sensible repayment program that caters to your needs, which could mean a rollover. However, if co-operation stops or you are unable or unwilling to repay your loan your lender may take you to court.

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.

If a lender does take you to court, it’s important that you show up. You should never ignore a lawsuit. A lot of lenders automatically win cases, because their clients do not show up to court. It is always in your best interest to attend court.


What Will Happen if I Don’t Repay my 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.

During the time in which your loan is not being paid, it will still be accruing interest.


repay payday loan

What if I Cannot Repay?

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.

When you realise that you will not be able to repay the loan, it is best to get in contact with your lender directly and see if you can work out a schedule for repayment that works for both you and the lender. Wherever possible the lender will try to make it possible for you to repay the loan.

It is worth noting that a payday loan is only ever designed to be used as a short term fix, for unpredictable, unexpected one-off payments. A payday loan  should be used to bridge the gap between one pay cheque and the next. That means that you should only ever be borrowing for a short period of time.


Was this article helpful?
Charlotte Diffey

Charlotte is a talent young writer who has a passion for personal finance and credit. She has a particular knack for answering the tough questions and giving insights and help to people who need it most. She started writing for her University publication and has since made her way into the mainstream press. You can follow her here on Linkedin.