Can my wages be garnished to pay back a payday loan even if I’ve made payment arrangements?

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Can my wages be garnished to pay back a payday loan even if I’ve made payment arrangements?

Asked on April 4, 2012 under Bankruptcy Law, Wisconsin

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If there is an actual agreement in place between you and the creditor (or their collection agency) and you have been honoring it, then no, they cannot garnish your wages--garnishment is a mechanism for a creditor to obtain payment when there is no payment plan or schedule or the debtor dishonors the plan. A payment plan or agreement is a contract and is enforceable against both parties; so long as you honor its terms, they cannot take further action.

The key issue, though is whether there is a payment plan which the other side agreed to. A contract is only formed by mutual agreement--you cannot make payment arrangements unilaterally and require them to accept those arrangments. So if they did not agree to the arrangements, then they can take action, including wage garnishment, even if you have been sending the payments--they would have to apply those payments against the balance you owe, but without their agreement to the arrangements or plan, they are not bound by it.


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