Basics

• A payday loan works like any other debt: on a written promise to repay. Such debts are usually secured by a postdated check. If the check bounces, the payday lender will try to collect the debt from you directly with collection calls and letters. However, after several months of unsuccessful collection efforts, some payday loan companies may opt to sue you. Being successfully sued has a number of consequences, including a judgment entry being placed on your credit reports for at least 7 years. In most states, unpaid lawsuits can be renewed indefinitely, leaving such a record on your credit report continuously. Most creditors can garnish your wages to pay lawsuits. You can fight back, however, if a payday loan company sues you.
  
  

Being Served

• Once the payday loan company sues you, you will receive notice of a lawsuit in the mail or by a sheriff's deputy visiting your home or business. You will be asked to appear at your local court on a particular date if you wish to dispute the lawsuit. A summons does not mean you have already lost the case. It means that the payday lender is trying to sue you so it can collect the money you owe. Only a judge can render a decision on a lawsuit.
  
  

Trying to Settle

• The best thing to do if you receive a summons is to call or write the payday lender and ask to work out the situation without going to court. Be sure to get any agreements in writing, and keep evidence of any payments you make. If the payday lender refuses to cooperate, you can still try to work it out but will have to go to court.
  
  

Going to Court

• Even if you made payments to the payday lender before the court date, you should still go to your court date. Show the judge that you made payments and/or have an agreement with the payday lender, and she will likely set another court date to make sure the situation is resolved completely.
  Even if your payday lender is uncooperative, you can still try to work the debt out in court. Most states are passing harsher laws against payday lenders, which may help you.
  Showing up to your court date and expressing an interest in paying your debt will likely do a lot of good for your case. If more court dates are set, be sure to attend those so you can avoid having a lawsuit on your credit file.