The hearing, in London, will affect thousands of cases where borrowers have taken out loans at punitive rates of interest, only to find they cannot pay them back.
At stake is whether the Consumer Credit Act can be interpreted in a way that allows a court to reduce, where necessary, rates that are not deemed to be fair.
Consumer groups, led by Lancashire Legal Action Centre, believe the law can be applied in this way. They argue that clauses in the Act give judges the right to cut not just the monthly amount being paid, but also the rate of interest that determines it.
Dr Michael Ramsden, a barrister who will be representing the Centre before the Appeal Court, said: "The implications of this decision are of potentially great significance for many thousands of debtors.
"It would not only allow courts to re-schedule debts, giving debtors longer to pay. This is not itself in dispute. But lending houses say a court can only reduce the interest rate on the arrears, which may only amount to a fraction of the total amount owed."
In one test case victory last year, a judge decided to cut the rate payable on a loan from 28.4 to 18 per cent APR on the remainder of the entire loan.
The decision followed an earlier victory by the same Lancashire centre, where the rate to be paid was cut from 31.5 per cent APR to 28 per cent.
But it is this case which is now to be heard before the Court of Appeal. "We already have a batch of almost 60 more cases ready to go before the courts, based on the results of this appeal," Dr Ramsden said.Reuse content