Yes, it is possible to stop a payday lender garnishing your wages. Garnishing wages is agreed in a court, meaning that a payday lender would have had to have taken you to court for this to occur.
Taking a customer to court will be a last resort for a payday loan company, meaning that you have defaulted on payments numerous times. The best way to avoid a lender garnishing your wages is through open communication and attempting to come to an alternative agreement.
What is Wage Garnishment?
Wage garnishment is the process whereby your employer is forced to hold back a portion of your wages every month in an attempt to pay off your debt to a lender. When your employer holds your wage, you will have no access to it, meaning that if necessary then it will be paid directly to the lender and you will be unable to spend it or use it to finance other circumstances.
This process can occur when the bank or credit union of which you are a member is served with a garnishment order. Restrictions surrounding this process vary by state, so it is important to be aware of the rules in your state to avoid having your wages garnished.
Will You Be Pre-Warned About Wage Garnishment?
It is not possible for wage garnishment to take place without your knowledge. This is because wage garnishment only occurs as part of a court order, so you should be there if it is announced that your wages will be garnished.
If you ever do begin to default on your loan payments, the first step that the payday lender will take is to try and deduct the fees directly from your bank account. This can then incur additional fees with your bank if you enter an overdraft which has not been prearranged or exceeded a credit limit.
If this is not possible for the lender, they will then attempt to contact you regarding their repayment and the steps which need to be taken. After the end of your loan agreement period has passed, the lender will be required to collect any funds which you may still owe if they have not been repaid within the agreed timeframe.
What Happens During a Court Process?
During a court process, the judge will deem the best way for you to repay your loan to the lender, which may be wage garnishment. It is important to note that wage garnishment being agreed during a court hearing will be a last resort, as most lenders will try and arrange a way for you to repay your loan without a court hearing. The judge will be made aware of how much you still owe to the lender before deciding the most appropriate way for you to repay the remaining funds.
Can You Avoid Wage Garnishment?
Yes, in certain circumstances, you may be able to stop a payday lender from garnishing your wages. The steps you can take to prevent or halt wage garnishment by a payday lender are summarized below:
1) Communication with the Lender:
Contact the payday lender as soon as you realize you are unable to repay the loan as agreed. Explain your financial situation and discuss possible options for repayment. Some lenders may be willing to work out a repayment plan or negotiate a settlement to avoid the garnishment process.
2) Negotiate a Repayment Plan:
If you are unable to repay the full amount at once, propose a repayment plan that suits your financial circumstances. This could involve making smaller, manageable payments over an extended period.
3) Check State Laws:
Research your state’s laws regarding payday loans and wage garnishment. Some states have specific regulations that restrict or limit the amount that can be garnished from your wages for certain types of debts, including payday loans.
4) Seek Legal Advice:
Consult with an attorney who specializes in consumer law or debt-related matters. They can provide legal advice tailored to your situation and help you understand your rights and options.
5) Request a Hearing:
In some cases, creditors are required to provide notice of intent to garnish wages and give you an opportunity to request a hearing. Attend the hearing to present your case to the court. If the court finds that the garnishment would cause undue financial hardship, they might modify or stop the garnishment.
If you are facing severe financial hardship and have multiple debts, filing for bankruptcy might be an option. Bankruptcy can provide legal protection against wage garnishment and help you manage your debts, although it has long-term financial implications.
7) Debt Settlement:
Consider negotiating a debt settlement with the payday lender. This involves offering to pay a reduced lump sum to settle the debt. Keep in mind that debt settlements may damage your credit score and have tax implications.
8) Stay Informed:
Educate yourself about your rights as a debtor. Lenders must adhere to certain legal processes, and understanding these processes can help you protect your interests.
It is important to note that while these steps can help you address wage garnishment, they might not guarantee a complete halt to the process. Legal procedures can vary depending on your location and the specifics of your situation. Seeking professional advice and taking proactive measures can increase your chances of finding a solution that works for both you and the payday lender.
Wage garnishment can be avoided, ideally by discussing your financial situation with your lender. The best thing to do if you are struggling financially is to communicate this to ensure all parties are aware of any difficulties which may be occurring. As a last resort if you cannot make any repayments whatsoever, it is possible to declare bankruptcy, however you should be aware of the repercussions this may have.
Justine is a full-time writer with lots of expertise and a wealth of experience in the financial world. In particular, she specializes in household income and consumer finance across the United States. Follow her articles for useful advice and top tips, guides on how to save money and lots more.