Payday loans are small loans that usually have to be paid back by your next paycheck. Lenders may ask you to give them a post-dated check or permission to take money directly from your bank account.
In Illinois, the law says payday loans can’t have total interest and fees higher than 36% a year.
Payday loans are different from many other debts because:
- The lender may try to take money from your bank automatically.
- Some loan contracts have a “wage assignment” clause. This means they might try to get part of your paycheck without going to court. You can revoke a wage assignment by sending a letter.
Your rights and protections
- The law limits rates to 36% APR and bans “rollovers” where you renew the loan with more fees. After 35 days, you can get a repayment plan with no new fees or interest.
- Collectors can’t threaten you, lie, or harass you. They must give you written proof of the debt if you ask.
- You can tell your bank and the lender in writing that you’re taking away permission to pull money from your account.
- You can cancel a wage assignment at any time by telling the lender and your employer in writing.
- Lenders usually have 10 years to sue on a written loan, but making a payment or a new promise can restart the clock.
Your options
Before a lawsuit:
- Ask for proof of the debt. Use Illinois Legal Aid Online’s Debt Collector Letter form.
- Cancel any wage assignment right away if you get notice.
- Check if the lender is licensed. Unlicensed payday loans may be void.
If you’re sued:
- Don’t ignore court papers. You might have defenses, like the lender charging too much interest or not being licensed.
After a judgment:
- You can protect your property and income by going to court and claiming your exemptions. This means you tell the judge to apply protections to your income and property.
Learn more
- Illinois Legal Aid Online (ILAO):