Bills Logo

Illinois Payday Loan

Mark Cappel
UpdatedNov 23, 2009

I have three payday loans in Illinois that I can't repay. What are my rights?

I need help with payday loans. My husband took out 3 loans called smart loans without my knowledge and we can't pay the interest any longer which we have always been on time. Our problem is we have paid so much interest and principal is not going down. Will a cease and desist letter work... I want to work out a payment plan to pay the principal down only. I have contacted the store and their solution was to take out another loan to make the payment. I do not want to get trapped in that. I would like to pay off the loan in full but have the interest stopped. I closed our bank account so they can not cash the checks, but I am afraid they sue us for check fraud. What are my options I live in Illinois?

Payday loans, also called "cash advance loans," "check advance loans," or "deferred deposit check loans," are a frequent pitfall for consumers. A fee anywhere from $15-$30 per $100 borrowed is charged for an average loan of $300. The borrower will give the lender a post-dated check, which the lender later uses to electronically transfer a payment or the entire balance of the loan from the borrowers account.

An especially insidious practice is to withdraw a partial payment from the account as a "customer service." This partial payment becomes a perpetual installment that continues despite the borrowers' best efforts to halt it.

With rates so high and the term of the loan so short there is no wonder that a very high percentage of these loans are rolled over by the borrower again and again so that the accumulated fees equal an effective annualized interest rate of 390% to 780% APR depending on the number of times the principal is rolled.

One slightly light-hearted fact regarding payday loans:, the leading online encyclopedia, list payday lending under Loan Shark, stating that "if the defining characteristics of loan sharking are high interest rates and a credit product that traps debtors, then the label certainly applies."

The Federal Trade Commission offers a great Web page regarding payday loan alternatives.

Payday loans & Illinois consumer rights

In 2005, the Illinois General Assembly put into law Public Act 094-0013: Payday Loan Reform Act , which regulates payday loan companies and the terms these lenders can offer consumers in Illinois. Illinois offers a one-page guide to payday loans.

Consumers have the following rights and protections for payday loans under Illinois law:

  • Consumers cannot be charged fees of more than $15.50 per $100 borrowed
  • Consumers have the right to a full disclosure of all fees and the annual percentage rate (APR)
  • Consumers cannot borrow more than $1000 or 25% of their gross monthly income, whichever is less
  • Consumers can have no more than two payday loans at a time
  • Consumers can request a repayment plan after 35 days of outstanding debt. Once in the repayment plan the consumer may not be charged interest, finance charges, or any other fees
  • A lender may not sue a consumer until 28 days after the loan was due or the repayment plan ended
  • A lender may not take an interest in a consumer's personal property
  • A lender may not charge the consumer for attorney's fees or court costs to collect the debt
  • A rollover of a payday loan is prohibited
  • Members of the military have additional protection
  • Consumers may cancel a wage assignment at any time by contacting the lender
  • Consumers may cancel a payday loan at no cost if the consumer cancels the loan by the end of the second business day immediately following the day the loan was executed

Repaying an Illinois payday loan

Illinois consumers may have two payday loans at any one time. Therefore, if your spouse has three payday loans, the payday lender who made the third payday loan was in violation of Illinois law when it executed the third loan.

If the payday loans are 35 days or more in age, your spouse has the right to enter into a payment plan. Under Illinois law, once your spouse is in the repayment plan your spouse may not be charged interest, finance charges, or any other fees. Therefore, if your spouse has payday loans, the payday lender must allow your spouse to enter into a payment plan and not be charged any fees.

Editor’s note

Comments on this page are closed. See Payday Loans to learn how to handle payday loan collections. See the payday loan resources for California, Florida, Illinois, Massachusetts, Missouri, New York, Texas, and Virginia to learn more about payday loan laws in those states.

If the payday lender refuses to allow your spouse to begin a no-cost payment plan for a payday loan, contact the Illinois Attorney General (AG) and provide the AG with documentation of the violation. You should get the results you want after the AG's office becomes involved.

More payday loan information

To learn more about tactics and strategies for dealing with creditors, read the article Debt Negotiation and Settlement Advice. also offers more information on the Payday Loan Information page, and has answered reader questions about payday loans in California, Florida, Illinois, Massachusetts, Missouri, New York, Texas, and Virginia.

If you do not repay a payday loan, the payday loan company has several legal remedies, including wage garnishment, levy, and lien. See the resource Collections Advice to learn more about the rights of creditors and debtors.

See also the no-cost Financial Planning and Budget Guide, which can help you manage your finances and you can learn about budgeting and prudent financial management.

I hope this information helps you Find. Learn & Save.




KKelly, Feb, 2013
I currently have 5 payday loans out right now. I can not make all the payments. I was reading that in illinois you can't have more than 2 payday loans. I am behind with a few of them and they are talking about taking my wages. What can I do, if they take my wages it will surely hurt me even more. I need help, please.
BBill, Feb, 2013
I will assume you are an Illinois resident.

Reread the original answer above to understand your rights as an Illinois resident, and the payment plan Illinois requires payday lenders to follow. Contact the Illinois Attorney General's office if the payday lenders do not comply with Illinois law.
BBrandon, Aug, 2011
I'm paying four installment loans and my hours are being cut and I'm not able to pay on time. What are my options and can bankruptcy get rid of them?
BBill, Aug, 2011
If you qualify for a Chapter 7 bankruptcy, it can discharge your obligation to repay your loans. Other than that, you need to try and work out a payment plan with your lenders or try to negotiate a reduced settlement. Given the fact that a settlement likely requires a lump sum, which you probably don't have (or you would be using it to make your monthly payment), I think you should speak to a bankruptcy attorney. If you find out that you qualify for a bankruptcy Chapter 7, you may choose not to file, but use that fact as a point of leverage with your lenders. Tell them straight up that if they don't work with you, they will get nothing. Do not use this strategy unless you are able and willing to go through with the bankruptcy filing.
SSylvia, Jun, 2011
I live in Illinois and I have 5 payday installment loans that I can no longer afford to pay. I haven't missed a payment yet. I am thinking about entering into a Debt Management Plan for my unsecured credit card debt as well as the payday installment laons but was told that the payday loan companies are not willing to work with Debt Managment Plans. What are my options regarding the payday loans.
BBill, Jun, 2011
Your options are limited. See the resource Payday Loan Collection Advice to learn one tactic for resolving the debt.

Readers have asked about payday loan consolidation companies. We know nothing about these companies, their ownership, or financing. None of this data is public information, which gives us pause. They may be legitimate or not — we simply do not know. Accordingly, we do not recommend readers pursue payday loan consolidation.
EEmma, Jul, 2011
I have SEVERAL payday INSTALLMENT loans as well, I can no longer afford the interest on these loans and considering defaulting on all of them as I am not able to take care of my essential needs because Im paying all this high interest on the loans. Can criminal charges be filed on me for defaulting? Why are there less solutions to resolving Installment loan issues Vs Payday loan issues?? PLEASE HELP
BBill, Jul, 2011
I am unfamiliar with a "payday installment loan." If you have a payday loan and are an Illinois resident, then re-read the original answer above to learn your rights as an Illinois resident who becomes delinquent on a payday loan. If you have an installment loan, then consider debt settlement or consumer credit card counseling.

To learn more about your rights, call your county bar association and ask for the name of the organization that provides low- and no-income people in your area no-cost legal services. Make an appointment with that organization, and bring all of your documents regarding that debt to your meeting. The lawyer you see will review your documents and advise you accordingly.
RRuth, Jun, 2011
I reside in Illinois and in 2008 took out several pay day loans. My house was about to be foreclosed so I filed bankruptcy. The pay day loans were included in the bankruptcy. Recently, I have been receiving phone calls from "legal depts" of laws firms. One was identified as Morgan Law in Florida. The representatives have advised that I am being charged with criminal offenses of bank fraud and two other charges that I could not understand. The representatives do not speak English very well and are very difficult to understand. I spoke to my bankruptcy attorney's legal assistance and she advised the they can file criminal charges if I wrote a check and it was returned. This was not the case. My bank account was closed shortly after filing bankruptcy. What type of criminal charges could I be charged with? Thank you for your time.
BBill, Jun, 2011
I cannot comment on the Illinois criminal code. However, in general, in states where bouncing a check is a crime, the DA must prove the check-writer intended to commit the crime. With a payday loan, the borrower may not have the funds in the account to pay the check at that moment, but they intend to in a week or two weeks, or whatever the term of loan is.

Did you intend to defraud the payday lender? If yes, then you may have committed a crime. If you did not, and circumstances simply caught up with you that you could not anticipate, then it is highly unlikely the DA will give your case the time of day.

Refer the caller to your bankruptcy lawyer.