If you decided to obtain a payday loan and did not make your repayment on time then you’ve probably received numerous calls from payday loan debt collectors. These debt collectors may have used the threat of garnishing your wages in order to try to get you to repay them. Otherwise, your payday loan company may have already taken out a chunk of your paycheck. The question is, is this legal? And is there anyway to stop them?
The answers to these questions depend on one thing; is your payday loan company garnishing your wages or are they actually taking out money using a “wage assignment?” Whatever the case, your paycheck will be smaller due to the fact that your employer will pay a certain percent of it to the payday loan company every month. However, if it’s due to a wage assignment then it is possible to prevent or stop it.
If you have a wage assignment taken out on you then it’s likely that you signed documents saying that you agree to it if you are unable to repay your loan or somehow fail to meet your contractual obligations. This makes wage assignments completely voluntary, since by law it is required that you agree to it. Wage assignments come about pretty quickly. Usually the lender will send your employer a letter of intent asking for them to withdraw money from your paycheck. They will also send you a letter warning you that a wage assignment is going to occur.
Stopping a Wage Assignment
In order to halt a wage assignment you must typically send in a letter by mail to your employer and your payroll department, as well as the loan company. This letter doesn’t have to be particularly long or wordy, it simply has to get all the pertinent information across. Be aware that if a loan payment collector calls and claims that you signed off on a wage assignment, you have the right to revoke this and so it is an empty threat. In fact, the company you work for may not even allow voluntary wage assignment, as it is a lot of paperwork for them to complete.
The Process of Wage Garnishing
Unlike wage assignment, wage garnishing is not as easy to stop, however it is also not as easy to begin either. In many states, a wage garnishment that was court ordered requires the payday loan company to sue you in a court using a civil suit. Once the payday company has won the suit they will then file a motion to garner your wages, and so this process isn’t quick at all, and can take between several weeks to several months. Keep in mind that throughout the process you will get ample warnings in the form of notices.
Stopping Wage Garnishing
Know that once the loan company files all these motions, and the process of wage garnishing begins, the only thing that can stop it is declaring bankruptcy or paying off your loan in full. If you are unable to win a lawsuit then fighting against wage garnishment should take place when you receive your first notice on it. How you go about this process depends on your specific state’s laws and so it is recommended that you talk to a lawyer if you haven’t already hired one when the payday loan company first filed the suit.
The Amount Garnished
Federal law limits the amount that a payday company can garnish from your wages. It is usually capped off at no more than twenty-five percent of your monthly income. There are other laws that have an affect on whether or not they can garnish pension, disability income or Social Security, and in most cases they can’t.
Varies From State to State
Some states have laws that allow people to avoid garnishment. For instance, in Florida there is a wage garnishment exception for the incomes of those who are a head of household. On the other hand, there are some states that make wage garnishment easier on the company. There are also four states that ban wage garnishment completely. These are Pennsylvania, North Carolina, Texas and South Carolina.