Wage Garnishment & Payday Loan in California
- Judgment-creditors may garnish wages in California.
- The amount available for garnishment varies with the type of debt.
- Judgment-debtors can apply for an exemption using form WG-006.
Are payday lenders permitted to contact your employer and seek out a garnishment of your wages without a court order?
I had seen a previous response from you regarding storefront payday loans and garnishments. I am wondering if the same holds true for online payday loans? Are they permitted to contact your employer and seek out a garnishment of your wages without first having filed suit and obtaining a judgment? I am working with a debt settlement/consolidation group and was advised to put stop payments on the payday loan companies. This particular company had me sign something that allowed them to garnish my wages if I defaulted. Are they permitted to do this under California law?
The waiver/statement/document you signed that allows the creditor to garnish your wages without a court order is rubbish. An experienced and properly trained human resources or payroll administrator would laugh if such a document crossed their desk.
However, not all human resources or payroll people are experienced or trained and may be bamboozled by an illegal wage garnishment order if it is dressed up with intimidating legal language and arrives in an envelope from an attorney’s office. I suggest you locate your human resources or payroll person and have a confidential conversation with about your situation. Ask if they have handled wage garnishments before.
In California, a creditor is required to file an Application for Earnings Withholding Order (form WG-001) and Writ of Execution (form EJ-130). A completed Writ of Execution will contain a stamp from the California court and a signature by a clerk of the court. An experienced human resources or payroll administrator will recognize an authentic Writ of Execution and will not be fooled by whatever document the payday lender will provide. (See the California Franchise Tax Board document Wage Garnishment / Earnings Withholding Order and Small Claims Forms: Collections (for Debtors))
Comments on this page are closed. See Payday Loans to learn how to handle payday loan collections. See the Bills.com payday loan resources for California, Florida, Illinois, Massachusetts, Missouri, New York, Texas, and Virginia to learn more about payday loan laws in those states.
Other states will handle wage garnishments differently, but the basics are the same: A court must order a garnishment unless the garnishment is related to tax liability or the repayment of a student loan.
Assuming for the sake of argument that a judgment-creditor begins the wage garnishment process, judgment-debtors can apply for an exemption. In California, judgment-debtors who are about to have their wages garnished should read California form WG-003 and then complete form WG-006 to apply for an exemption. Do so immediately -- a wage garnishment is much easier to prevent than unwind if you are exempt from garnishment.
I hope this information helps you Find. Learn & Save.
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2022 was $16.91 trillion. Student loan debt was $1.60 trillion and credit card debt was $0.99 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
Collection and delinquency rates vary by state. For example, in Delaware, 15% have student loan debt. Of those holding student loan debt, 8% are in default. Auto/retail loan delinquency rate is 4%.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.
The laws of remedies are very precise. Follow the civil procedure laws exactly when completing a garnishment order, lien, and so on. Consult with a lawyer if a form does not make sense to you, or if the procedures are unclear. Making a procedural error at this stage in the game can cause all of your hard work to this point to be thrown out the window.