Payday Loans Tied to Bank Accounts
You can withdraw your permission to the lender to take money from your bank account. Some payday and other short-term loans require a written Automated Clearing House (ACH) authorization, which gives the lender permission to electronically take money from the customer’s checking or savings account when payment is due. Cancellation or revocation of an ACH authorization will prevent such withdrawals from being made from your account or stop payment on checks. However, it will not prevent the lender from applying fees and penalties on overdue payments or from seeking civil remedies. For example, if you gave the lender a post-dated check and there is not enough money in the account to pay the check when the lender submits it to the bank, the lender will charge you fees and penalties and the bank may charge an overdraft fee.
Garnishment and Default Judgements
Garnishment is a court order that allows creditors to take repayment directly from a debtor’s paycheck or bank account. Garnishment varies significantly from state to state, so risks are higher for someone with assets who is in a more permissive garnishment state. The likelihood that a court will order a garnishment against you is higher if there is a default judgment. If the debt is taken to court for collection and you have granted someone your power of attorney, that person may engage a lawyer for you and make legal decisions on your behalf to avoid a default judgment (but unless the person is a lawyer s/he cannot represent you in court).