Many borrowers who have defaulted wonder: can a payday loan company garnish my wages? The short answer is no — not without a court order. According to the Federal Trade Commission (FTC), payday lenders cannot legally garnish your wages unless they first go through the proper legal process.
Below, we’ll explain how wage garnishment works, what the FTC says about payday lenders, and your rights as a borrower.
Can a Payday Lender Legally Garnish My Wages?
There are two main stages to wage garnishment involving payday loans:
Licensing & Lawsuit Filing From a Payday Loan Company
- The lender must be licensed in your state.
- To garnish wages, they must first file a civil lawsuit.
- A court judgment is required before garnishment can begin.
➝ Many payday lenders skip this step and send wage garnishment notices directly to employers — which is illegal without a court order.
- Court-Ordered Garnishment
- If the creditor files a lawsuit and proves you owe the debt, the court may grant a wage garnishment order.
- Only then can your employer legally withhold wages to pay the debt.
Important: Payday lenders are not government agencies. Only federal or state agencies (like the IRS) can garnish wages without first obtaining a court judgment.
FTC Lawsuit Against Payday Lenders
The FTC filed suit against several payday loan companies, including Eastbrook LLC (Ecash, GeteCash), LoanPointe LLC, and individual operators.
The FTC claimed these companies:
- Offered loans up to $1,000, automatically tied to borrowers’ paychecks.
- Forced borrowers to agree (often unknowingly) to wage garnishment clauses hidden in fine print.
- Violated the FTC Act, the Fair Debt Collection Practices Act, and the Credit Practices Rule by attempting to garnish wages illegally.
These actions were ruled deceptive and unlawful.
Know Your Rights Before Taking Out a Payday Loan
If you’re considering a payday loan, always remember:
- Payday lenders cannot garnish your wages without a court order.
- Loan agreements may include hidden terms — always read carefully.
- Many states require lenders to provide clear disclosures at least 24 hours before you sign.
- You have the right to revoke any pre-signed wage garnishment agreements.
The Bottom Line: Can Payday Lenders Garnish Your Wages?
No, payday lenders cannot directly garnish your wages.
They must first sue you, win in court, and obtain a judgment. Any attempt to bypass this process is illegal under federal law. They can send a voluntary request to your employer to garnish what you owe if you signed for one at the application process. But sending the payday lender a wage assignment revocation will eliminate that from happening. A professional payday loan debt relief company will issue one at the beginning of your enrollment though.
If you are struggling with payday loan debt, know that you have options. Understanding your rights is the first step toward financial relief.
Frequently Asked Questions About Payday Loan Wage Garnishments
- Can a payday loan company garnish my wages without a court order?
No. Payday lenders cannot legally garnish your wages without first suing you and obtaining a court judgment. - What happens if I don’t pay back a payday loan?
The lender may try to collect through phone calls, emails, or debt collectors. Eventually, they may file a lawsuit. If they win, wage garnishment could follow. - Can payday lenders garnish my wages if I agreed in the loan contract?
No. Even if the contract includes a wage garnishment clause, federal law requires a court judgment before any garnishment can take place. - What states allow wage garnishment for payday loans?
Wage garnishment laws vary by state, but the general rule remains: a court order is required, regardless of the state. - Who can garnish wages without a court order?
Only government agencies, such as the IRS or the U.S. Department of Education (for federal student loans), can garnish wages without a court ruling. - How can I stop wage garnishment from payday loans?
You can:
- Negotiate directly with the lender
- Work with a debt relief company or payday loan consolidation program
- File a claim of exemption in court
- Consider bankruptcy as a last resort
