Before getting the answer to whether payday loans can take you to a court, let’s focus on what payday loan is? Payday loans are just like your personal loans, however with a short term and very high rate of interest. Thus, they are known as bad credit loans as well. These are short term temporary loans usually availed at the time of emergency situations when no other credit option is available?
Unlike any other loans which are repaid in intervals, payday loans are repaid at once since the credit period is very short. The period being in the range of two to three weeks, and thus the name, the bad credit loans.
Can A Payday Loan Take You To A Court?
Since payday loans are short term loans with very high rate of interest sometimes it is not possible for the borrower or the customer to pay back the lender the principal amount and the high rate of interest within a very short period of time which is usually two to three weeks. Thus additional defaulter’s fee is charged on the principal amount and the interest amount which becomes even a greater amount and leads to a never ending cycle of debt paying since the amount has to be paid at once. The harassment by the lender continues until and unless the debt is repaid which adds to mental stress.
When the situation worsens for the lender and he can see that there is no way that the borrower or the customer can repay the payday loan which was granted him, he has two option either to reduce the amount which is done by forfeiting the defaulter’s fee and only accepting the principal amount and the high rate of interest. But there is no way that a lender will go into losses. Thus, he opts for the last option rendered to him which is taking the matter to a court. Now the question is whether the lender wants a court case or it is just a stunt to scare off the borrower and let him cave in.
Sometimes it is just a stunt to scare off the borrower and let him cave in by taking the matters into court. This is because loan companies taking their customers to the court for payday loans are very rare. In actual the lender wants you to be scared and just pay the amount due to him because even he knows that when you cannot pay the payday loan granted to you, you cannot pay the additional fee on court hearings and proceedings. So it is just a stunt where he wants you to scare off and not actually show up in the court.
If you are taken to the court for a payday loan it is advised that you should show up because it is important for the judge or the jury to know both the sides of the story. Also it makes a point that you are not a fraud just a normal citizen surviving and struggling to meet your ends. Also if your lender has overstepped in any way you can make a case and take him into the court provided your reasons are correct (such as the company has no license for granting loans etc.) and you have a strong case, not just for the sake of getting away with the payday loan.
Pros Of Payday Loans
Though it is advised to get in touch with your family and friends and look for other credit options, but still if no other credit option is available at the time of emergency, then the payday loans is the best solution to the problems. If you have a stable employment with a recurring income which can cover the principal amount and the high rate of interest then there is no harm in availing a payday loan.
Cons Of Payday Loans
Though payday loans are the only hope of light in a dark tunnel, it is bright light only for a short period of time if you do not have a good credit score and enough income to cover the principal amount and the high rate of interest. It is a start to bad credit cycle, never ending cycle of debt payment and much more. Thus, it is advised to consult other credit options before availing a payday loan. Also ask help from your family or friends rather than a payday loan.
The Bottom Line
Thus, we see that you can be taken to a court for failing to pay your dues, just as you could have been taken to the court for failing to pay the dues for other sorts of loans, like your personal loans, or even your student loans.
However, it is suggested in the first place to not avail a payday loan. But, if you have availed it and are not able to repay it back, and if the lender wants to take you to court for the same reason, you should not get scared. The easiest thing to do is to show up in the court. Do not miss your lenders call and always try to negotiate with them. Do not miss the court hearings and let others know your side of the story as well. Stay calm and take the right decisions.