If you default on the loan payment and do not make the payment in full and on time, the lender will have the right to take you to court. The lender can start enforcement proceedings to recover the money you owe.
If you do not have the money to repay the loan, the lender can sell the assets that you have declared as security on the loan documents. These assets can be property, car or any valuable goods.
What steps lender can take to recover a payday loan?
The lender will try to recover all the money you owe by repossessing any assets you have listed on the documents. Before doing so, they will serve you with a notice, stating you have defaulted on the loan amount and you have 30 days to repay the amount.
If the lender is unable to contact you and believes that you are trying to sell the good or property without a permission from the lender, they may choose to not issue a notice before repossessing the secured asset.
If you do not let the lender possess your secured asset, they will have the right to initiate court proceedings against you. You can file a defence against the court case, if you do not do so, the lender will get an order or judgement against you. Once they have an order, they can take further steps to recover money from you.
What other steps can a lender take?
Here are the further steps that a lender can take:
- A warrant which allows the lender to seize and sell your assets. The money from the sale will be used to repay your loan
- An enforcement hearing summon, which requires you to go to the court with documents and explain your financial situation
You will not be sent to jail for not repaying your quick cash loan, but if there is a judgement against you, you may have to bear the court related expenses for the lender and there will be a negative impact on your credit rating.
What options you have when you cannot repay your loan?
If you have realised that you will not be able to pay the next due payment, here are some steps you can take:
- Delayed payment: While it is best to make all payments on time and in full, but if you are cash strapped, you must try to make the payment within 30 days of the due date to avoid complications.
- Refinancing or consolidating the loan: Refinancing can help you by giving you lower interest rates on the loan and giving you more time to repay the loan.
- Discuss options with the lender: If you foresee trouble, it is best to discuss with the lender and explore options you have. You may be able to negotiate a settlement that gives you more time.
- Prioritize the repayments: If you have multiple loans, take a wise call on which loan repayment you must prioritize. For example, it is prudent to continue paying instalments of home loan and vehicle loan, and hold a personal loan payment.