Can my paycheck be garnished or can I be arrested for defaulting on a payday loan?

UPDATED: Aug 20, 2011

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Can my paycheck be garnished or can I be arrested for defaulting on a payday loan?

I took out a couple of payday loans 5 months ago to help with a family emergency and pay bills. I have made regular payments. I recently had a medical emergency and fell behind on my bills. I was unable to keep up payments to the loans and all my other expenses. I defaulted on the payday loans in order to catch up on my rent and medical expenses. I am currently receiving daily phones calls several times a day demanding immediate payment. If payment is not received I am being threaten by severe legal actions taken against me. Can they have me arrested or my pay garnished?

Asked on August 20, 2011 New York


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

First things first. You cannot be threatened with arrest for non-payment of a payday loan (or any loan).  In this day and age people no longer go to jail for owing money. A defaulted debt is a civil not criminal matter. That is unless of course you committed fraud obtaining the money; for example if you borrowed money and had no intention of paying it back. That would be a crime. Absent that no one can threaten you with arrest or in any way threaten you. If they do you could actually sue them. It's the law and it's called the "Fair Debt Collections Practices Act".  Additionally, certain state laws may also apply in such a case.


The fact is however that you still owe the money. So your creditor/debt collector could sue you in court for the amount owed. If they win and obtain a judgement, they can then size any non-exempt assets. And this could include up to 25% or so of your paycheck.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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