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Payday loan companies and wage garnishment

The concept of so-called payday type loans is not new. Many Cincinnati residents who have fallen behind on bills due to a wide variety of reason are tempted to seek these short-term type of bridge loans to meet deadlines on other bills, hoping to catch up at a later time. In many areas of the country, payday type lenders eventually are not paid and many seek to garnish wages from people who have defaulted on the payments.

Before a creditor can garnish wages in Ohio, the lender must obtain a judgment in court on the debt. Many payday type lenders follow through with the process across the country. Wage garnishment can act like a double-whammy to a financially distressed household budget.

Nine payday lenders doing business under as many as 17 different company names have recently agreed to temporarily halt seeking wage garnishment until a lawsuit against the lenders brought by the Federal Trade Commission is resolved. The FTC claims the companies added clauses written in small print to their lengthy contacts for payday loans that essentially unfairly caused people seeking the short-term loans to unknowingly waive their right to dispute wage garnishments brought by the lenders.

It is important to note that state and federal laws exist to protect consumers from unscrupulous lending practices. But, Cincinnati bankruptcy attorneys are aware that not all collection activities are unlawful. Financially distressed Ohio residents also have federal bankruptcy laws available as a source of legal debt relief. The nation's founders expressly authorized the Congress to create bankruptcy laws in the Constitution.

Source: The Consumerist, "FTC gets some PayDay Lenders To Halt Garnishing Wages Without Court Order," Chris Morran, Sept. 14, 2011

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