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When you enter a contract with one of the US’s 23,000 regulated lenders, you have certain rights and they have certain rights. It is important to understand what your rights are to ensure that you are not being exploited. 


Key Points:


  • Payday loans are unsecured debts, meaning your home cannot be seized under your contract.


  • Your lender has the right to press legal charges against you for failing to comply with your contract.


  • Many lenders will allow you to request an ‘arrangement to pay’ – a restructured payment plan.


  • Lenders must comply with state and federal regulations, so your rights will vary from lender to lender, and from state to state.



When you enter a contract with a lender, you gain certain rights, and they gain others. All terms should be included in your contract.

Can A Lender Sue Me For Not Repaying My Loan?


Yes, a lender could push legal action against you. This is because if you fail to pay your loan back on time, you are breaching the terms of your contract. Pressing legal action will be a last resort for a lender, but it may happen. This is mostly because payday loans are unsecured, meaning they can’t seize your vehicle or car if you fail to pay. In order to get their cash back in their possession, they may need to involve legal proceedings. 


If this happens, the likely outcome here is that a new repayment plan will be drawn up. On top of this, you will encounter late fees, perhaps increased interest, and damage to your credit score. 


Can A Lender Seize My Home?


No, a payday lender has no right to seize your home. Payday loans are unsecured, meaning no collateral has been declared as a security to attain your loan. In simpler terms, your loan is not protected by your assets. With secured loans, you may grant your lender rights to your home or vehicle if you fail to pay it back. Given that payday loans are unsecured debt, this is not the case. 


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. 


Do My Rights Vary From Lender To Lender?


Yes, your rights will waver between lenders. Firstly, independent lenders curate their terms and conditions in line with state and federal laws. For instance, some lenders may not allow you to take out multiple loans with them at once. Some lenders may cooperate if you need a restructured repayment plan, while others will state in your contract that they will be accommodating. 


Secondly, your rights will depend upon state regulations, which means that your rights will differ from state to state, and therefore lenders in certain states will have different rights. Some states, such as Washington and Virginia,  limit how many loans you can have at once, therefore removing your right to another loan. 


Other states, like California, cap how much you can borrow. California, 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 limit how much interest can be applied to payday loans, 18 states, thus far, have set that cap at 36%. Interest-limiting states include Montana. 


When agreeing to a loan, you should be sure that your lender is sticking to federal and state regulations. 


can i lose my home

Payday loans are an unsecured form of debt, meaning your home cannot be seized if you don’t meet repayments.


Can My Lender Access My Money?


Suppose you have money in your account but have failed to pay your lender as agreed. In that case, your lender will usually have stated in your agreement that they can automatically withdraw what they are owed rather than going through the legal process. If this has happened to you, check that your contract allows them to do so. If you have paid your debt, but have noticed withdrawals, contact your bank immediately. 


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


Can I Request An Adjusted Repayment Plan?


An Arrangement To Pay is when a lender and borrower create a restructured repayment plan, usually because the borrower is struggling to repay their loan. With 25% of borrowers rolling over their debts, this is not unusual, and you should not be ashamed to approach your lender – they’re there to help you. 


An Arrangement To Pay will leave a mark on your credit history, but this is a preferable alternative than having defaulted payments on your credit record. 


Richard Allan

Richard Allan

Richard Allan is the founder of Capital Bean and a passionate writer about personal finance, budgeting and how to save money at home and work.

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