Prepare to be sued in civil court. If you default on a payday loan, the lender has the option of suing you to collect the overdue amount. Once the lender has a court judgement against you for the amount due on the loan, he or she may seize your property (with the help of a law enforcement officer) and sell it to pay the balance of the loan. Tennessee Foreclosure. Tennessee mortgage and foreclosure laws can be found in TCA 35-5-101 to 35-5-111, and 66-8-101 to 66-8-102. See also TCA 45-20-101 to 45-20-111, which is called the Tennessee Home Loan Protection Act.A lender may foreclose judicially or non-judicially in Tennessee. According to the Consumer Financial Protection Bureau, payday loans are short-term, high-cost loans for small amounts. Payday loans certainly aren’t the bargains of the personal finance world, but many people look at these loans as an easy fix for short-term cash flow issues.