questions & answers

Question: I have just started to get my wages garnished agian from a car loan I had with a bank five years ago. I started a new job and was getting garnished from my last employment I had gotten my total down more then half and now that they have started garnishing at my new employment the total I owe has more then doubled off my original balance in which they sued me for in the beginging, my question is just how much intrest can a bank (not a collection agency) charge on a defaulted loan that is in the process of being garnished legally? I will end up being garnished for the next 6 years at this rate.

Answer: Generally the original signed loan will state the amount of interest that can be charged for the loan. It is possible for banks to charge as high as 20-25% interest in a garnishment order for a loan. The interest, however, cannot simply be added on if it exceeds what has been established in the loan contract. The bank would have to prove that the interest is valid and that they have sufficient reason to charge the interest amount sought. For example the banks could show that money has been lost during the time that the loan was unpaid (ex. back pay) or in the time spent attempting to get a ruling on the case. To find out how the law applies to a specific situation, contact an attorney directly.