What are the garnishment laws in regards to a Payday Loan obtained online?

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What are the garnishment laws in regards to a Payday Loan obtained online?

I have an employee who got a payday loan on-line from a company in UT. She is now in default and the company wants to garnish her wages based on a contract she signed with them on-line. The have garnishment documentation but not an actual court order. Can she be garnished based on her signing their agreement and their paperwork or does the company have to have an actual garnishment summons?

Asked on October 20, 2010 under Bankruptcy Law, Virginia

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

I think that you should check with your business attorney and your accountant on this matter.  Virginia laws on payday loans and companies that do the lending is much stricter that Utah's.  In fact, Virginia requires that payday lenders be licensed when lending to Virginia residents whether or not they have a business in Virginia.  What you have before you is what: a self executing agreement to garnish?  You need to check if this is legal in your state.  Some states allow self executing agreement (where the lender does not have to go to court but can just use the agreement to collect the debt).  Some do not.  But I would err on the side of caution until your attorney checks it out.


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