Can I be taken to court if I do not pay back a payday loan?

The simple answer is not you probably will not be taken to course if you do not repay the payday loan you took out. Although don’t think that because you won’t be taken to court that a payday loan is free money.

Failing to pay your debts will seriously damage your credit score which will hamper you in the future if you apply for a mortgage or other types of credit like a credit card. You will also be charged a late payment fee which is capped at £15 (These are FCA rules) and interest will be added each day of missed payment.

On top of damaging your credit score you will have to deal with fielding calls from the lender and debt collectors as well as getting letters from them too

All reputable Payday lenders are authorised and regulated by The Financial Conduct Authority who have laid down very strict rules as to how a payday lenders can go about collecting on the debt they are owed.

For example, a lender looking for the debt to be paid back may only contact you certain times per day within particular hours, they can’t call you in the middle of the night, that’s tantamount to harassment. Also, they may only contact you a fixed number of times per week.

If you are in this situation of having fallen behind on your repayments, we advise that you keep a log of each phone call, the time of day and the frequency. This can be used in your case against the lender if they overstep the mark.

Let’s be clear here, it is not that you won’t go to court, it’s that the lender probably won’t take you to court if they are dealing in small amounts of money of a few hundred pounds. It will not be worth their time or resources and will most likely pass the debt to a debt collection agency.

How to repay your loan if you fall behind.

When you borrow money you sign an agreement either a physical or digital signature to state that you accept the terms and conditions of the loan, this is called a “loan agreement”. Payday loans are taken out for a very short space of time, normally a few weeks. Whereas short-term loans are taken out for periods between 3 and 12 months.

During the loan application you would have given your bank details to the lender along with the date which you are paid. On the date which has been agreed the lender we take the payment from your bank account. This automatic payment is called a Continuous Payment Authority (CPA).

When the due date arrives, you must ensure that the money is in your bank account so that the loan can begin to be repaid. The lender will take the agreed amount including interest.

What happens if I don’t have the money in my bank?

Lenders will normally attempt to take the payment early in the morning of the day the repayment is due. If there is no money, there or not enough money in the account they will attempt a few more times.

The lender will not continue to try to collect since every time they try to collect there is a cost to them.

If you are unable to make the repayment you will need to contact them as soon as you know that you will not be able to repay the loan. If you do not contact then they may be less likely to offer you assistance although they are bound by FCA rules to give you a chance to repay. Although we are dealing with humans and humans can be emotional. If the lender believes that you are trying to “steal” the money they may resort to debt collectors sooner rather than later.

The Debt collectors

If you continue not to repay the loan, either you have not contacted the lender, or you can’t agree to a revised repayment plan then the lender will resort to passing the debt on to the collection agencies. This will happen after around 8 weeks of initial non-payment.

The collection agency will take responsibility for collecting the debt from you. First, they will call you and write to you to see if you can come an agreed repayment scheme.

It is best to work with the collection agency at this point since they will persist until they either recover the money or get a court order to enter your premises to recover goods to the value of the loan plus fee, interest and any fees they put on top for their services.

You never want to get to this stage, and we hope that as soon as you find yourself unable to pay you must contact the lender. They will do everything they can to help you out and make the repayments. See our guide on how to deal with debts.

Interest and charges

If you fail to pay the loan one time or miss a repayment you will incur a later repayment fee which is capped at a maximum of £15. This cap was set by the FCA to prevent the loan from growing out of control.

Each day you leave the loan unpaid will attract more interest. This too is capped at a maximum of 0.8% per day

The bottom line is that for a small amount of money of a few hundred pounds it is very unlikely that you will be taken to court although the damage to your credit score may take a long time to recover. So, get on the phone and speak to your lender.

The following websites also offer very good advice on what you can do if you fall into debt. and

You should always seek professional advice when handling debt problems. Cashute are not licensed debt advisers and any information contained in this article should not be taken as legal advice. It is your Responsibility to seek out correct legal advice

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Warning: Late repayment can cause you serious money problems. For help, go to