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 Posted: Wed Oct 03, 2007 10:24 am Subject: Wage Assignment Article
Latest Blog Post : http://frogpatch.yesdebtfree.org |
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Here is an article on wage assignments that was published two weeks ago that I thought people might find interesting!
| Quote: | Payday Loan Wage Assignment: Just Say No!
By Wendell Sherk, Attorney at Law on Sep 21, 2007 in Debt Collector Abuses, Missouri, Personal Finance
An increasingly common collection tool for payday and small loan lenders is the voluntary wage assignment. It can be particularly effective for employed borrowers with no bank accounts. The assignment can make it harder for folks to pay the things they must pay –like rent and car bills - and makes the spiral into bankruptcy more likely.
A wage assignment is simply a direction to the borrower’s employer to deduct a specific amount from the borrower’s paycheck and send it to the lender. It is like a garnishment but not issued by a court of law. It is often included in the “standard†loan documents which many customers sign without reading. If the post-dated check from the customer bounces (or no post-dated check was provided), the lender can try to use the wage assignment.
In some states it is entirely legal, in some it is not, and in some it is severely limited. The Federal Trade Commission limits the amounts which can be taken where it is allowed and makes it an unfair trade practice to compel an irrevocable wage assignment. The most important aspect though is that it is supposed to be voluntary. It can be revoked any time.
A borrower can usually send a clearly written (certified mail) letter to the lender stating they revoke the assignment of wages executed on or about the given date of the loan, signed and dated, with a copy to the employer’s payroll. A sample explanation of the process and form are here. (Thanks to David Yen of Legal Assistance Foundation of Chicago.)
Why would anyone bother to lend on a collection tool the borrower could refuse to honor with a simple letter? Because most people probably won’t read the fine print of their contracts and they won’t realize when the wage assignment goes through payroll that they have a choice. And they fear the consequences of revoking it. But often pursuing more traditional collection on such small loans is not terribly cost-effective for the lenders so the consequences maybe a lot of ugly phone calls.
The hard truth is that taking back control of your financial affairs means standing up for your rights and not letting someone do things to you, even if you agreed to let them before. That’s harder but more rewarding in the long run. |
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frogpatch
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Posted: Wed Oct 03, 2007 10:49 am Subject:
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Great article. Thanks, Frogpatch.
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pybasj
Joined: 08 Aug 2007
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Posted: Wed Oct 03, 2007 10:54 am Subject:
Latest Blog Post : http://Punkteri.yesdebtfree.org |
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Great find! The last couple of paragraphs are soooo true, I never heard of a wage assignment until I found this site, and would have no clue if I signed one or not. I can not say enough how helpful everyone here has been!
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Punkteri
Joined: 17 Aug 2007
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Posted: Wed Oct 03, 2007 10:58 am Subject:
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Thank you so much Frog  . You have helped clear up the confusion of what it really means.
ladybug
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ladybug
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frogpatch
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Posted: Wed Oct 03, 2007 10:09 pm Subject: reply
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frog, excellent!  Now, if everyone would PLEASE copy and print this out & include it with your wage assignment revoke letter, it will probably work wonders. The main issue here is that employers are not educated. They do not realize these are voluntary. Please copy and print this out. Keep it. Stash it. Give it to your employer. Staple it to your revoke letter. Whatever. This is wonderful back-up!
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cannr
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Posted: Thu Oct 04, 2007 6:04 am Subject:
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Great work Frog. It's so sad how many people out there are probably not aware of this disturbing trend.
_________________
"Who leaves a country packed with ponies to come to a non-pony country?"
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JEN5276
Joined: 31 May 2007
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Posted: Thu Oct 04, 2007 6:08 am Subject:
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yep that was a great article. I am still loving the fact that it is illegal in NC regardless.
_________________
Remember: Stressed spelled backward is desserts.
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lorim1971
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Posted: Thu Oct 04, 2007 11:33 am Subject:
Latest Blog Post : http://frogpatch.yesdebtfree.org |
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One of our members employer refused to believe that the wage assignment was illegal and even though she showed the law to them and the revocation letter they honored it anyway and took half her pay and sent it to the thugs. I hope this helps prevent that from happening again!
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frogpatch
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Posted: Thu Oct 04, 2007 8:08 pm Subject: frog
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frog, you're great. I still say for everyone to PRINT THAT OUT and staple it to the wage revoke letter given to the employer and also on their own copy. PLUS "educate" the employer that these are illegal companies trying to pull crap. We can only pray that they read what you posted and let it "sink in". I'm still sick over the poor member whose employer honored it. Sickening.
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cannr
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