Can Payday Loans Garnish Your Wages?

Can a payday lender garnish my wages? Well, according to the FTC, the answer is no. There are two stages to this issue. First, a lender must be licensed in the state they are lending you money in. If licensed, they must file a civil suit before a judgment can be entered and a garnishment ordered. Many lenders are not licensed. They continuously bypass due process by sending a garnishment to your employer without a court order.

The second stage involves a lawsuit against the debtor. This is where the creditor files a complaint with the court and asks for permission to attach the debtor’s wages. The court will grant the request if there is evidence that the debtor owes the debt. In most cases, the creditor must prove that the debtor is indebted to him or her.

But the FTC states this is not legal.  The FTC filed suit against the defendants. They are Eastbrook LLC, doing business as Ecash and GeteCash; LoanPointe LLC; Joe S. Strom; Benjamin J. Lonsdale; James C. Endicott; and Mark S. Lofgren.

FTC Claims regarding Payday Lenders Garnishing Wages

The FTC claimed that these payday loan companies illegally tried to garnish borrowers’ wages. And they did so by offering loans of up to $1,000 to be repaid from a borrower’s upcoming paycheck. Additionally, they require online loan applicants to check a box on their agreement, indicating their clients agree with loan terms.

But, these terms included an inconspicuous statement consumers often don’t see or don’t read. The statement reads that the consumer’s wages will be garnished to cover delinquent loan payments. The statement allegedly attempts to circumvent federal requirements. And including a debtor’s right to revoke a garnishment agreement.

So, the FTC alleges that the lenders violated the FTC Act. They violated the Fair Debt Collection Practices Act. And they violated Credit Practices Rule in carrying out their scheme. Only federal agencies can garnish employees’ wages without a court order when the employees owe the government money.

So We Now Know Can a Payday Lender Garnish My Wages

But a payday lender is not a government agency.  And must take action in a court of law and get a judgment before they can proceed with any wage garnishment.  You can read more about the FTC Suit here. These loans must be paid back, and our proven program will help you. Just fill out the form to the right for a no-obligation quote. You have nothing to lose and everything to gain by getting these payday lenders off your back.

Know Your Rights Before You Apply

If you do decide to apply for a payday loan, make sure you understand what you’re signing up for before you agree to any terms. Many states require lenders to provide borrowers with certain disclosures about how much money will be taken out of their paychecks and how much they’ll owe in fees and interest. These disclosures must be provided at least 24 hours before the borrower signs the contract.