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Can a payday lender garnish my bank account or my wages?

A payday lender can only garnish your wages if it has a court order resulting from a lawsuit against you. There may be other restrictions on a payday lender’s ability to garnish your wages. But it’s important not to ignore any legal notices or orders.

If you don’t repay your payday loan, the payday lender or a debt collector generally can sue you to collect the money you owe. 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.

What is a garnishment?

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. Almost all states permit wage garnishment although there are  a few states that do not permit wage garnishment for the collection of this type of consumer debt. Contact your state’s attorney general office for information about your state. Under federal law, certain benefits or payments are generally exempt from garnishment.

Be aware that some payday lenders may threaten garnishment to get borrowers to pay, even though they do not have a court order or judgment. If this happens, you may want to seek legal assistance. Contact your state's regulator or attorney general office for more information. You may also contact a legal aid attorney or private attorney  for assistance. You can submit a complaint about payday lending with the CFPB online or by calling (855) 411-2372.