Can a payday lender garnish my wages?

If you don’t repay your loan, the payday lender or a debt collector generally can sue you to collect. If they win, or if you do not dispute the lawsuit or claim, the court will enter an order or judgment against you. The order or judgment will state the amount of money you owe. The lender or collector can then get a garnishment order against you.

Wage garnishment happens when your employer holds back a legally required portion of your wages for your debts. Bank garnishment occurs when your bank or credit union is served with a garnishment order. The bank or credit union then holds an amount for the payday lender or collector as allowed by your state law. Each state will have different procedures, as well as exemptions from garnishment, that apply to both the wage and bank garnishment process. For example, under federal law certain benefits or payments are generally exempt from garnishment.

Be aware that some payday lenders have threatened garnishment in order to get borrowers to pay, even though they do not have a court order or judgment. If that should occur, you may want to seek legal assistance.

Contact your state’s regulator or attorney genera l office for more information. You may also contact a legal aid attorney or private attorney  for assistance. You can submit a complaint about payday loans with the CFPB online or by calling (855) 411-2372.

Tip: Don’t hide from bad news. Don’t ignore a lawsuit summons or other notices from a court or the lender, or any court proceedings against you. If you ignore a lawsuit, you may lose the opportunity to fight a wage or bank garnishment.