Is It Possible To Garnish Wages With Payday Loan? Consequences
Payday loan can reduce salary?
Is it possible that creditor who issued the payday loan to you wants to quickly withdraw money back or withdraw from your account an amount greater than what is written in the agreement? If you get your wages and suddenly find that it is less than you expected, and now you have to somehow get out. This unpleasant case is not particularly common, however in some cases this can occur. Such occasion may happen when the borrower does not carefully read the contract before signing it and in fact does not know its legal rights. Some lenders may not be entirely bona fide, but in this case you take the hazard of remaining half a month without your wages. So is it possible to garnish wages with payday loan?
Payday loans are small loans that very often help many people solve some sudden problems. They provide small amounts to borrowers up to next payday, usually up to $ 1,000 for any purpose. This is very convenient if you got unexpected difficulties that need to be urgently resolved. Payday loans approve most of those who apply for it. They are issued very quickly, so most often the borrower gets his money in a few hours and on the same day can already solve their problems.
However, salary loans have their own nuances that should be should be thought out before signing the contract.
Payday loans are issued most often without checking the credit rating, so they are available to borrowers who have certain troubles with their credit. But again, creditors are unprotected to large financial risks, and then the interest rate of such credits is materially higher than it will be in case other types of financial support.
In addition, in order to guard themselves from the high risk of non-payment of a loan, lenders commonly tie up the payout of the loan to borrower’s salary. The sum of the credit automatically will be deducted from your payroll account.
Garnish wages with payday loan is a situation where your employer is forced to write off part of the salary to repay your loan in favor of the creditor. This is conditioned by the contract you signed when you make a loan. In general, this is true, looking at the conditions under which the payday loan is issued.
However, in the event of any delay in payment on your part, the creditors can use rather crude methods to get their money back.
These could be threats on creditor’s part, debiting money from your accounts due to information about which you provided to them, and even lawsuits, despite the small amount of loans. Lenders often charge huge interest rates and various penalties.
In order to understand how it will be correct to conduct and talk with them, it is important to understand your legal rights and the limits of their authority. To do this, of course you need to know the terms of the contract that you signed with them.
What is the wages assignment?
In some cases, with different lenders such an unpleasant situation is possible, when lenders will assign your wages automatically, after an official appeal to your employer. In this situation, you should remember that this is only possible if you give your consent to this by signing the contract.
No one has the right to force you to sign such a contract. This can only be your voluntary decision. However, if you have not read the agreement carefully, then you may simply not be aware that there is such an item.
But everything is not as bad as it may seem at first glance. Automatic debiting of your salary in favor of the lender can be prevented, even if you gave your consent earlier. To do this you must write a letter to the payroll department of your employer and to the lender, using the services of a certification mail. The letter must indicate that you are canceling the creditor’s right to automatically write off your wages.
If you are frightened by prison
When lenders want to get paid back as soon as possible they can go over to various threats. You may be threatened with jail for not paying your debt. This is not true, you cannot be jailed for minor debts. In addition, such threats are illegal and you can write a complaint to the local prosecutor’s office.
Try to negotiate to garnish wages with payday loan
When for any reason you have a situation where you cannot repay the debt in a timely manner, try to negotiate with the creditors to postpone or reduce the payment. Collection companies and lawsuits do not add profits to creditors, but can cost half the amount of the debt, so they can meet you if you try to negotiate with them.
You can let them know that you are likely to become bankrupt soon, and then offer them to pay off only part of the loan amount. Rather than losing the entire amount, the lenders would rather agree to lose only a part of it.
Of course, this option with bankruptcy in the end will have a very negative impact on your credit, so it’s better to use it only in the worst situation, when you have no other options left. It is better to try to find a way out of the current difficult situation by any other means.