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Did you know that a payday lender may only garnish your wages in limited situations? One such instance is if the lender has taken legal action against you and obtained a court order specifically permitting wage garnishment. However, it’s important to note that wage garnishment is typically not the initial course of action for lenders seeking to collect the money you owe.
Understanding Wage Garnishment
Have you ever wondered what exactly a wage garnishment is? Well, let me explain it to you in a friendly and helpful way. A wage garnishment happens when a portion of your hard-earned money is legally withheld by your employer to pay off your debts. Unfortunately, this means that you won’t receive that specific chunk of your paycheck as it goes straight towards settling those debts.
In addition to wage garnishment, there is another similar process called bank garnishment. In this case, your bank or credit union receives a garnishment order to deduct funds from your account to pay off your debts. It’s important to note that the rules and procedures may slightly differ depending on the state you reside in, as each state has its own set of specific procedures and exemptions from garnishment.
Don’t worry, though! We understand that dealing with wage garnishment and bank garnishment can be overwhelming. If you need any further assistance or information regarding this matter, please feel free to ask.
Will I Be Notified If a Payday Lender Wants to Take My Wages?
Of course! You’ll always be informed before wage garnishment is considered as an option if you happen to fall behind on payments. Without a court order, wage garnishment cannot take place, so rest assured that you won’t be taken by surprise. Initially, when you start missing payments on your payday loan, your lender might try to withdraw the owed amount directly from your account, which could result in bank fees for you. If they are unable to recover their money this way, they may resort to collection calls and potentially file lawsuits. Even after the loan period has ended, the lender will still try to collect any outstanding balance on your loan.
The best approach when facing payment difficulties is to reach out to your lender. Most lenders are willing to work closely with you to find a reasonable repayment plan instead of immediately taking legal action.
Remember, during the period when your loan is unpaid, it will continue to accumulate interest.
Understanding the Court Process for Fraudulent Payday Lenders
When it comes to addressing your repayment, payday or installment lenders will always try to work out a reasonable plan that suits your needs before resorting to court action. It’s their last option, and they want to avoid it whenever possible. However, if cooperation breaks down or you are unable or unwilling to repay your loan, your lender may choose to take you to court.
In states like California, Texas, or Illinois, payday lenders are not just pursuing large-scale cases – they may also take legal action over smaller amounts. So, it’s not uncommon if your lender decides to go down the legal route even for a relatively small loan amount.
If your lender takes you to court, it is crucial that you attend the proceedings. Ignoring a lawsuit is never a good idea. Unfortunately, many lenders automatically win cases when borrowers fail to show up. Attending court is always in your best interest.
If you fail to repay your loan and the payday lender or a debt collector decides to take you to court, their success is likely. If they win the case or you do not dispute the lawsuit or claim, a court order or judgment will be issued against you. This judgment will outline the amount of money you owe. At this stage, the lender or collector can seek a wage garnishment order to recover the outstanding debt.
Can I Prevent Wage Garnishment for Payday Loans?
Absolutely! In the majority of situations, you can avoid wage garnishment for payday loans. The best way to do this is by maintaining open and honest communication with your lender. If you find yourself having difficulty with payments, reach out to your lender and explain your situation. By doing so, they will often be willing to work with you and provide a payment plan that suits your needs. Remember, open communication is the key.
Additionally, there are other options available to you if you’re unable to repay your payday loan. You can explore options like declaring bankruptcy or entering into an Individual Voluntary Arrangement (IVA).