Expert: Kathleen Eads - 6/28/2006

Question
My husband and I got a payday loan through 200cash.com.  After receving it, my husband had surgery, leaving him unable to work.  He is collecting FMLA through his employer at $276 a week.  We ended up defaulting on this payday loan.  Now the company is going to start garnishing his wages.  The rep at the company said that they do not need a court order to do this.  My husband had to sign a form before getting the loan that stated if we defaulted, we give permission to 200cash.com to get the money from his employer.  My husband never signed the paper, I did (in is name)  He gave me permission to do so.  Does this cancel anything out and how can we stop this?  The company will not make arrangements for us.

Answer
Stacey,

If you signed on his behalf and you live in a community property state (where all debts incurred by either spouse are the responsibility of both), then the paper they have could be upheld in court.  

I'm not sure how much was borrowed.  Normally, a creditor would need to take you to court and get a judgment in order to garnish wages.  Payday loan companies are relatively new on the scene, and they may have tools in place (that you sign) enabling them to attach wages in states that allow it, in the event of default.  

I hope you get it worked out.  I'm missing some of the details to give you a more definitive answer, but from what I've read, the loan company is acting with authority to do so.  

Kathleen Crabtree-Eads