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When you decide to take out a loan, you are also deciding to enter a contract with a lender. That which gives them certain rights. So, you should read up about Understanding Your Rights With A Lender. There are over 23,000 payday lenders operating in the US, and you should be familiar with your legal obligations to the one you choose. 


Do My Rights Vary From Lender To Lender?

Yes, they do, and there are a couple of key reasons why. Firstly, different lenders will have more stringent terms than others. For instance, many lenders will allow you to alter your repayment plan if you need to. Meanwhile, others may state in your contract that they will be unbending in the repayment plan. 

Secondly, the terms of your agreement will have to conform to state regulation, which means that your rights will differ from state to state, and therefore from lender to lender. Some states, such as Washington and Virginia,  limit how many loans you can have at once. This means that you have no right to receive another loan from your lender if you’re borrowing in such a state. 

Other states, such as California, set limits on how much you can borrow. California, just to name one, sets a cap at $300. If you’re borrowing there, your lender is being entirely honest by saying they can’t provide you with more. 

Other states, such as Montana, limit the interest you can be charged. 18 states, so far, have set this cap at 36%. 

As such, when you’re borrowing, you should be sure that your lender is sticking to federal and state regulations. 


Can A Lender Have The Right To Seize My Home?

So, can a lender take your home if you don’t pay off your loan? The most common answer is no. Payday loans are unsecured loans, which means that your loan is not protected by collateral. In other words, you have not stated in your contract that if you fail to repay your loan, your creditor can seize your home – or other assets – to make up what you owe them. 

So, the straightforward answer is no. Rather, if you default on your payments, you could be hit with late fees, added interest, and detrimental impacts to your credit score. 

However, you need to be sure about liens. Some lenders will place a lien on your home, which is a legal claim on it. When you attempt to sell your home, you have to pay off your debt to remove this lien and move forward with the sale. 


Can A Lender Sue Me For Not Repaying My Loan?

Yes, a lender could push legal action against you. This is because you have entered and broken a contract by not repaying your loan according to your agreement. This will always be a last resort, as it takes time, effort, and funds for a lender to carry out legal action. 

The likely outcome here is that an agreement will be reached for a new repayment schedule. However, you will also be hit with late fees, making an already expensive means of borrowing even more costly. 


If I Have The Money But Haven’t Paid, What Can My Lender Do?

If you have chosen not to pay your loan, but have the money owed available in your account, it is likely that your lender will automatically withdraw what they are owed rather than going through the legal process. Lenders are usually granted this right within your contract – so check that this is the case. 

Your lender may choose to use wage garnishment, which means that part of your paycheck is withheld and transferred to the lender before you receive it. 


Do I Have The Right To Ask For An Adjusted Repayment Plan?

Many borrowers struggle to repay their loans, with 1 in 4 borrowers rolling over their debts. When you find yourself struggling to stay afloat and juggle your repayments, it is important to acknowledge this and speak to your lender. 

You could be entitled to an Arrangement To Pay, which occurs when a borrower and lender restructure the terms of a repayment agreement. While this will leave a mark on your credit history, this is a less detrimental scar than failing to pay altogether. 

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