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Can a Payday Loan Lender Garnish Wages for Unpaid Payday Loan

Payday loans are short-term loans that are typically due within two weeks. These loans allow individuals to meet unexpected expenses that occur out of the blue. When the loan amount becomes due, it is automatically debited from the individual’s bank account. Some lenders ask the borrower to write a post-dated check that is cashed in when the loan becomes due.

In case, the borrower does not have the required amount in the bank account, the payday loan lender resorts to various collection measures. One such measure includes calling the borrower and threatening to garnish the wages to pay back the loan amount. But, are they legally allowed to do that? We will discuss the answer to this question in a little detail in this article.

minimum wages by state in 2014
Minimum wage by state in 2014

Garnishing Wages: Can Payday Loan Lenders Legally Do That?

A payday loan lender can implement various techniques to force the debtors to make payment after the loan becomes due. They can also garnish the wages. However, this is only allowed after they file a case in the court. In case you fail to answer the summons within the specified period, they can request the court to order a default judgment in their favor.

If you have provided details about your work when making the loan application, the payday loan lender can ask the court to issue an Earning Withholding Order. The court order is served to the employer who will be required to garnish the loan amount along with other charges from your wages.

In case you ever find yourself in this situation, it is suggested that you consult with a legal attorney to ensure that you do not pay more than you are required to. This is especially important in case your payday loan lender has sold your loan amount to a debt collection agency that generally has qualified attorneys on their side who can try to maximize the amount that can be garnished from the wages.

In the end, you must not ignore lawsuit notices and summons that have been filed by the lender.

If you do not attend the initial court proceedings, the outcome of the case will go against your case creating deep financial difficulties for you.

Also, keep in mind that while the lender typically cannot garnish your wages for payment of the loan without a court order, if the loan agreement specifically contains a provision regarding this then a court order will not be required. That is why it is important that you carefully read the fine print of the loan agreement before signing the dotted line. You must never apply for loan with a payday loan lender that includes this provision in the lending agreement.


A payday loan lender can request your employer to garnish your wages only after a court order. Otherwise, it is not allowed for the lender to garnish the wages. The only time the payday loan lender can garnish your wages without a court order is when there is a provision regarding this in the loan agreement.