Archive for June, 2012

How to Stop Quickie Loan Companies from Getting your Salary

So you got one of those “quickie loans” from a place in a strip mall, to pay your mechanic, so he would fix your car, and you could keep working, and feeding your family. Because your hours at work have since been cut, the loan company is now taking money from your salary and you want to know if you can stop them.

Under Illinois law, the answer centers on whether the loan company is taking your salary by virtue of a court order, “a wage garnishment” or by your permission, “a wage assignment.”

When you got the loan, you were handed a bunch of papers and told to “sign here, and here, and here.” One of those papers was probably a contract between you and the loan company in which you authorized the loan company to deduct 15% of your net salary each pay period. The loan company did not have that right – until you gave it to them. Like any business or person in the United States, the loan company has the right to petition the civil courts for a wage garnishment, but to do so, they usually have to hire a lawyer, get a court date, have proper paperwork supporting their claim, and get a court order. Sometimes the court will deny the order if you do not make enough money, or if the complainant erred in their case.

But if in your haste to get the money, you gave the loan company permission to by-pass the court system, and to go directly to your employer using your “wage assignment” contract, the lender saves a lot of trouble, and maybe gets money they wouldn’t get if they were petitioning through a judge.

You can stop the wage assignment easily, by simply revoking the permission you gave the loan company. Send the lender and your employer a letter specifying the name of the loan company, the date of the loan, and that you are “hereby revoking any wage assignment arising from this transaction.” It’s a good idea to have a friend that reads the letter, sees you put the letter in an envelope, and watches you hand it to a loan company employee as you get the recipient’s name. While you’re at the loan company, explain that you are there to stop the wage assignment, but be sure to give them the letter. Or you can use certified mail – but that costs extra money.

Yes, the loan company can still petition the court for a wage garnishment, but that may take a couple months, and by then you might be current with the lender. And you may lose that business as a source of future loans, but there’s plenty more lenders who will offer high interest loans – next time, just refuse to sign a “wage assignment” contract.

Comments

Follow

Get every new post delivered to your Inbox

Join other followers: