What Can I Do if I Took out a Payday or Title Loan?

What Can I Do if I Took out a Payday or Title Loan?
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Last updated: December 2006

Ask For a “Repayment Plan”

All payday loans signed after December 6, 2005 now have a "repayment plan". This allows you to stop the interest from building up on the debt after 35 days. But you can only ask for a repayment plan if the loan is 35 days old or older. If you have not paid off a payday loan after 35 days, you can ask the payday lender for a repayment plan. The repayment plan will give you at least 55 days to repay the loan in installments with no more finance charges or other charges of any kind. If you and the payday lender agree, the repayment plan can be extended even longer, to 90 days.

Talk To a Lawyer

If you have borrowed money from a payday loan company or a title loan store, talk to a lawyer to see if they can get you off the hook. Sometimes short-term lenders do not follow all the laws. Search the "Helpful Organizations" section below to find free legal help.

Are you getting threatening phone calls?

Sometimes a payday loan store will call you when you have missed a payment and threaten you. They may try to scare you into paying them some money. But you cannot go to jail for failing to pay a payday loan in Illinois.

The only thing the payday loan store can do is sue you in the local civil court. If they win, the worst thing that can happen is that they can start garnishing up to 15% of your wages to pay off the loan. If you are retired or unemployed there will be no wages for the payday loan store to garnish. But, with the help of a lawyer you may win the lawsuit. Remember, even if they win a lawsuit against you, a payday loan store cannot touch your monthly social security or pension check. 

Did you sign a wage assignment?

If you signed a wage assignment when you took out the payday loan, you can revoke (cancel) it very easily. To cancel the wage assignment, just write a letter to the payday loan store and give a copy of it to your employer.

Click on the link below to go to the interview, which will automatically prepare the letter for you. Please answer the interview questions accurately and carefully to make sure that your letter will be correct. You may then print the letter and send a copy to the assignee and your employer. 

Letter to Revoke a Wage Assignment

Did you agree to let the payday loan store electronically transfer funds?

If you signed an agreement allowing the payday loan company to take its payments directly out of your bank or checking account, you should call your bank and tell them you want to cancel that agreement.

Did you give the payday loan store a post-dated check?

If you gave a post-dated check to the payday loan company, they will probably try to cash it. If the check bounces your bank will charge you a fee—maybe as high as $30. The payday loan company may threaten to file a criminal complaint against you for giving them a "bad check" but a new law says they cannot do this. 

You can call your bank and tell them not to pay on the check. There will be a fee for this.

Don't Sign a New Payday Loan to Pay Off the Old Payday Loan!

In many cases the smarter choice is not to sign a new payday loan to pay off the old payday loan, even if it means you will not be able to pay it off and will be defaulting. Signing a new loan extends the loan over time and allows the interest to grow. Sometimes it is better just to tell the payday loan company that you are unable to make any more payments. Or that you would like to enter into a "repayment plan". Sometimes there may be nothing the payday loan store can do to collect its money from you.

Have you thought about filing for bankruptcy?

If you have lots of debt in addition to the payday loan, bankruptcy proceedings might offer you a fresh start. To learn more about this option, click on the link below. 

Should I File for Bankruptcy?

Did you take out a title loan?

If you fall behind on a title loan, expect your car to be repossessed and sold. Repayment plans do not apply to title loans. Before your car is repossessed, the title loan company is supposed to send you notice and sell the car in a reasonable manner. If you would like to know more about your rights after repossession, click on the title below:

My Car Was Repossessed

Would you like to file a complaint?

Complaints against a payday loan outfit or a title loan lender can be directed to the Illinois Department of Financial Institutions
Phone number: (312) 814-2000, T.D.D. (312) 814-7138

For More Information

Read more about Payday Loans and Cash Advances and Car Title Loans

Helpful Organizations
The following organizations may be able to help you with

For a list of organizations in your area that may be able to help you, enter your zip code.

       

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