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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 41221
Experience:  Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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Customer Question

Do I have to pay back a loan when the lender is not licensed to lend in my state?
Submitted: 3 years ago.
Category: Legal
Expert:  Dimitry K., Esq. replied 3 years ago.

Thank you for your question. Please permit me to assist you with your concerns.

That is a good question. The underlying obligation, provided that it is still based on state law (by which I mean that the loan is not subject to conditions or usurious rates under your state's law), is still a valid debt. Consequently the payment is likewise required. You can potentially take the lender to court and in court try to convince the judge that this is a void debt, but until a court order exists that states that this is no longer a valid debt, your obligation to pay still remains. The debt is presumed to be valid until and if the courts deem it to be void.

I hope that clarifies and please let me know if I can assist you further.

Customer: replied 3 years ago.
When looking on Kentuckys DFI website it states that online payday loans are illegal in the state of Kentucky.....
Expert:  Dimitry K., Esq. replied 3 years ago.

Thank you for your follow-up.

Payday loans are legal in the state of Kentucky, they are just limited in certain conditions and in scope of the loan. For example a payday loan cannot be for more than $500. Plus, there are limits on charges. For example, for the $100 you borrow the finance charge is set to be no higher than 15% or $15 for 14 days. But by itself the loan is still valid, and my previous answer applies--the loan is presumed to be legal until and unless you take the lender to court and prove that the loan violates state law.


Here is the link to the LegalAid division of Kentucky which describes the process:

Good luck.

Customer: replied 3 years ago.
This is the information I found. If u scroll down towards the bottom is clearly states "Internet payday loans are illegal in the state if Kentucky"

Not to mention that one lender knowingly approved a loan of 300$ after being made aware I had two speared loans totaling 700$ previously...I believe that was in violation of what is stated on the link u sent. This is all very confusing for me sorry to keep asking questions.
Expert:  Dimitry K., Esq. replied 3 years ago.

I apologize but perhaps we are looking at a different webpage--I see nothing where the designation states that internet payday loans are illegal. Based on my own review of state code I do not see these loans as illegal, merely as very limited in scope. I do agree that giving money beyond the $500 limit violates state law, and that would grant you the ability to take the lender to court and try to void out the subsequent debts. But please be aware that until you do, the debts are considered to be valid and legal.

Good luck.

Customer: replied 3 years ago.
Expert:  Dimitry K., Esq. replied 3 years ago.

Thank you for your follow-up.

My apologies but my answer still remains. In this situation the duty is still on you to prove that this debt was illegal or invalid. You still have to pay it back until and if you are able to take the lender to court and have the judge void out your obligation. The fact you were given more than the state limit should be sufficient to allow the courts to void the debt, but until that happens the debt remains. Luckily you have a fairly strong argument that this was a predatory loan that you are not otherwise required to pay back.

Hope that helps.

Customer: replied 3 years ago.
Expert:  Dimitry K., Esq. replied 3 years ago.

My apologies but that is what I stated to you--the transaction is presumed to be valid UNTIL and unless you take it to court and void it out. But simply stating that it is void is not enough, a judge has to evaluate the conditions and then void the terms (as per the second clause in the statute). The responsibility of taking them to court and proving that this was a loan under the conditions of the statute is still yours, you have to file against them to void out the agreement.

Good luck.

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