Summary: Did you take a payday loan and neglect to pay it back? Find out if payday loans can garnish your wages.
Short answer. Yes, a payday loan lender can garnish your wages. But only under specific circumstances. Here's all you need to know.
Payday loans are meant to be paid back within a short period, usually on the borrower's next paycheck. However, things don't always go as planned for the borrower, forcing them to forfeit payment. In addition, since these loans are often high-interest loans, they can quickly turn into huge debt due to penalties and accumulated balances.
If you're in such a situation, your creditor may file a lawsuit against you, resulting in a wage garnishment order. So the question is, what can you do to avoid payday loan wage garnishment?
Avoid wage garnishment by filing a response to a debt collector with SoloSuit.
How do payday loans work?
The average repayment period of a payday loan is about two weeks. Different states set varying limits of this loan, usually ranging between $100 and $1,000. The loan also has a finance charge of between $15 and $30 per $100. This charge translates into an interest rate of at least 390% by the end of the lending period.
Usually, a borrower writes a postdated check that the lender holds until payday when the debt matures. Alternatively, the borrower may write an authorization for electronic debit to allow the lender to debit the money from their bank, prepaid card, or credit union. This process enables the lender to collect their money from the borrower's account when the debt is due.
Sometimes, the borrower can redeem the check by making a cash payment to the lender instead of the bank deposit. But if the borrower can't pay off the loan by the next payday, they may pay the debt's finance charge, allowing it to be rolled over to the next payday. Alternatively, the borrower may extend the loan period, but this comes at a fee. Both alternatives depend on the laws of the state and the regulations set by the lender.
Typical payday loans are usually payable in one lump sum, although some lenders allow for installments over a longer period. Despite that, payday loans are among the most expensive types of loans many borrowers fail to keep up with. As a result, a good number of borrowers end up deserting their debts.
Don't ignore debt collection lawsuits. Respond with SoloSuit
What happens if you fail to pay your payday loan?
- The lender may either try to cash the postdated check or make an electronic withdrawal from your bank. If you have an insufficient balance, your bank may charge you overdraft fees.
- The lender will also try to contact you for payment, and if the efforts aren't successful, the lender may forward the debt to a collection agency.
- The collection agency will use all means possible to recover the debt, and if all fails, they may file a debt collection lawsuit against you.
- If the collector wins the case, they may be awarded a wage garnishment order to collect their payment directly from your paycheck.
What is wage garnishment?
A wage garnishment is a court order that requires an employer to withhold part of an employee's earnings and send it directly to a creditor to pay a debt. But before the lender receives a wage garnishment order, they must file and win a lawsuit against you.
When the lender sues you for debt collection, it's always advisable to answer the lawsuit immediately and appear for court hearings if necessary to avoid a default judgment. If you don't know how to answer a debt collection lawsuit, SoloSuit provides an easy, three-step process to help you create an attorney-approved answer within minutes!
Like other lenders, there's a limit to how much a payday lender can garnish from your wages. They can either take whichever is lesser, between 25% of your disposable income and the amount that your income exceeds 30 times the federal minimum wage.
Protect your wages by responding with SoloSuit.
How to avoid a wage garnishment order
Rather than ignoring your payday debt, there are several things you can do to settle it amicably with the lender. Here are a few tips to consider:
Try negotiating with your lender. Many lenders dislike the tedious debt collection tactics and would welcome a borrower interested in working out a repayment plan. Seek non-profit credit counseling services, especially if you have more than the payday loan debt to worry about. These services can help you plan your finances even better.
If the lender files a lawsuit, ensure that you answer and attend all the court hearings to stand a fair chance of arguing your case. The judge may consider a repayment plan over wage garnishment. You can use SoloSuit to file an attorney-approved answer for your debt collection lawsuit within minutes!
Ignoring payday loans may lead to huge debts that you never intended to incur in the first place. Unfortunately, a wage garnishment order may also lead to bigger financial problems, especially if you have a lot of responsibilities to take care of. However, no matter how hard the situation is, it's always possible to negotiate a repayment plan with the lender.
This process starts by filing an answer to your debt collection lawsuit via SoloSuit. This software generates attorney-approved answers to debt collection lawsuits and then sends a copy to the complainant and another one to the court.
What is SoloSuit?
SoloSuit makes it easy to respond to a debt collection lawsuit.
How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.
Respond with SoloSuit
"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James
>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate
>>Read the NPR story on SoloSuit: A Student Solution To Give Utah Debtors A Fighting Chance
How to answer a summons for debt collection in your state
Here's a list of guides for other states.
All 50 states.
Guides on how to beat every debt collector
Being sued by a different debt collector? We're making guides on how to beat each one.
Win against credit card companies
Is your credit card company suing you? Learn how you can beat each one.
Going to Court for Credit Card Debt — Key Tips
How to Negotiate Credit Card Debts
How to Settle a Credit Card Debt Lawsuit — Ultimate Guide
Get answers to these FAQs
Need more info on statutes of limitations? Read our 50-state guide.
Why do debt collectors block their phone numbers?
How long do debt collectors take to respond to debt validation letters?
What are the biggest debt collector companies in the US?
Is Zombie Debt Still a Problem in 2019?
If a car is repossessed, do I still owe the debt?
Is Portfolio Recovery Associates Legit?
Is There a Judgment Against Me Without my Knowledge?
Should I File Bankruptcy Before or After a Judgment?
What is a default judgment?— What do I do?
Summoned to Court for Medical Bills — What Do I Do?
What Happens If Someone Sues You and You Have No Money?
What Happens If You Never Answer Debt Collectors?
What Happens When a Debt Is Sold to a Collection Agency
What is a Stipulated Judgment?
What is the Deadline for a Defendant's Answer to Avoid a Default Judgment?
Can a Judgement Creditor Take my Car?
Can I Settle a Debt After Being Served?
Can I Stop Wage Garnishment?
Can You Appeal a Default Judgement?
Do I Need a Debt Collection Defense Attorney?
Do I Need a Payday Loans Lawyer?
Do student loans go away after 7 years? — Student Loan Debt Guide
Am I Responsible for My Spouse's Medical Debt?
Should I Marry Someone With Debt?
Can a Debt Collector Leave a Voicemail?
How Does Debt Assignment Work?
What Happens If a Defendant Does Not Pay a Judgment?
How Does Debt Assignment Work?
Can You Serve Someone with a Collections Lawsuit at Their Work?
What Is a Warrant in Debt?
How Many Times Can a Judgment be Renewed in Oklahoma?
Can an Eviction Be Reversed?
Does Debt Consolidation Have Risks?
What Happens If You Avoid Getting Served Court Papers?
Does Student Debt Die With You?
Can Debt Collectors Call You at Work in Texas?
How Much Do You Have to Be in Debt to File for Chapter 7?
What Is the Statute of Limitations on Debt in Washington?
How Long Does a Judgment Last?
Can Private Disability Payments Be Garnished?
Can Debt Collectors Call From Local Numbers?
Does the Fair Credit Reporting Act Work in Florida?
The Truth: Should You Never Pay a Debt Collection Agency?
Should You Communicate with a Debt Collector in Writing or by Telephone?
Do I Need a Debt Negotiator?
What Happens After a Motion for Default Is Filed?
Can a Process Server Leave a Summons Taped to My Door?
Learn More With These Additional Resources:
Need help managing your finances? Check out these resources.
How to Make a Debt Validation Letter - The Ultimate Guide
How to Make a Motion to Compel Arbitration Without an Attorney
How to Stop Wage Garnishment — Everything You Need to Know
How to File an FDCPA Complaint Against Your Debt Collector (Ultimate Guide)
Defending Yourself in Court Against a Debt Collector
Tips on you can to file an FDCPA lawsuit against a debt collection agency
Advice on how to answer a summons for debt collection.
Effective strategies for how to get back on track after a debt lawsuit
New Hampshire Statute of Limitations on Debt
Sample Cease and Desist Letter Against Debt Collectors
The Ultimate Guide to Responding to a Debt Collection Lawsuit in Utah
West Virginia Statute of Limitations on Debt
What debt collectors cannot do — FDCPA explained
Defending Yourself in Court Against Debt Collector
How to Liquidate Debt
Arkansas Statute of Limitations on Debt
You're Drowning in Debt — Here's How to Swim
Help! I'm Being Sued by My Debt Collector
How to Make a Motion to Vacate Judgment
How to Answer Summons for Debt Collection in Vermont
North Dakota Statute of Limitations on Debt
ClearPoint Debt Management Review
Indiana Statute of Limitations on Debt
Oregon Eviction Laws - What They Say
CuraDebt Debt Settlement Review
How to Write a Re-Aging Debt Letter
How to Appear in Court by Phone
How to Use the Doctrine of Unclean Hands
Debt Consolidation in Eugene, Oregon
Summoned to Court for Medical Bills? What to Do Next
How to Make a Debt Settlement Agreement
Received a 3-Day Eviction Notice? Here's What to Do
How to Answer a Lawsuit for Debt Collection
Tips for Leaving the Country With Unpaid Credit Card Debt
Kansas Statute of Limitations on Debt Collection
How to File in Small Claims Court in Iowa
How to File a Civil Answer in Kings County Supreme Court
Roseland Associates Debt Consolidation Review
How to Stop a Garnishment
Debt Eraser Review
Do Debt Collectors Ever Give Up?
Can They Garnish Your Wages for Credit Card Debt?
How Often Do Credit Card Companies Sue for Non-Payment?
How Long Does a Judgement Last?
How Long Before a Creditor Can Garnish Wages?
How to Beat a Bill Collector in Court