How to Stop Payday Loans from Garnishment

A payday loan is a short-term loan designed to temporarily cover a borrowers expenses until his next scheduled paycheck. Many people utilize payday loans to pay for important items, such as rent, utilities, car repairs and medical bills. However, as with other types of loans, a payday loan must be repaid. If you fail to repay your payday loan, the lender may sue you and receive a judgment to garnish your wages, freeze your bank account or seize other assets. If you are currently behind on your loan payments, there is way to stop a garnishment from occurring.

Instructions

1

Contact the payday loan lender to discuss your options. Try to negotiate a reasonable settlement offer with the lender. If you are unable to make a settlement offer with the lender, then perhaps you can set up a monthly payment plan on your account. Make sure the payment plan is affordable for your budget.

2

Get the agreement in writing. Ask the lender to send you a formal confirmation letter outlining the terms of the payment agreement. The letter should include details about the current amount due (including late fees and other penalties) and your payment due dates.

3

Submit your payments to the lender. It is important that you submit your payments in a timely manner--by the scheduled due dates. If you fail to abide by the payment agreement, the payday loan lender may choose to proceed with a lawsuit and garnishment.

4

Confirm that your balance is paid in full. Once you make your final payment to the lender, you will no longer have to worry about a garnishment. Ask the lender to send you a paid-in-full letter stating that you paid off your balance according to the terms of the payment agreement.

5

Check your credit report for the appropriate updates. It may take the payday loan lender up to 30 days to update your account information with the credit bureaus. You can order a free copy of your credit report by visiting AnnualCreditReport.com. You will need to request your credit report from the three major credit bureaus--TransUnion, Equifax and Experian. If the lender has not updated your account information in an appropriate amount of time, submit a dispute form to each credit bureau.