Personal Finance

condition of loan... sign a garnishment agreement?

  • Last Updated:
  • Jun 6th, 2018 7:47 pm
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[OP]
Deal Expert
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Jan 27, 2004
50527 posts
14879 upvotes
ONTARIO

condition of loan... sign a garnishment agreement?

I got a unsecured line of credit from a credit union just last year.

I remember one of the terms and conditions of the loan is that I sign an agreement that allows them to garnish my bank account in the event of default or delinquency.

I thought... Okay... I can't foresee myself not paying back a loan. I mean... It might happen if I suffer a horrrrrrrifffic accident where all my arms and legs get chopped off... and i can't find work anymore.


They mentioned that fulfilling this loan condition helped them mitigate risk and approve it. Which makes sense. But is this a thing? It doesnt seem very common... or at least i never bumped into it.
5 replies
Deal Fanatic
Mar 21, 2010
6591 posts
3764 upvotes
Toronto
Is it an account held with the same credit union?
Sr. Member
Dec 15, 2015
705 posts
536 upvotes
Toronto
UrbanPoet wrote: I got a unsecured line of credit from a credit union just last year.

I remember one of the terms and conditions of the loan is that I sign an agreement that allows them to garnish my bank account in the event of default or delinquency.

I thought... Okay... I can't foresee myself not paying back a loan. I mean... It might happen if I suffer a horrrrrrrifffic accident where all my arms and legs get chopped off... and i can't find work anymore.


They mentioned that fulfilling this loan condition helped them mitigate risk and approve it. Which makes sense. But is this a thing? It doesnt seem very common... or at least i never bumped into it.
I think I recall when my credit was piss poor I signed something similar on a car loan. I can't remember the exact terms but because I was high risk they wanted it done. All I was thinking was, if I'm in that situation there wouldn't be money to garnish lol
Deal Fanatic
Jan 15, 2017
5310 posts
5427 upvotes
Ottawa
It is common that lines of credit have set off clauses. Set off clauses are only effective if you have other accounts with the lender. If not, the lender may insist that you sign the garnishee order on an outside account, which in effect, provides the same protection as the set of clause.
Deal Addict
Nov 8, 2017
1556 posts
888 upvotes
Last loan I had with BMO, they just took the payments out of my account bi weekly. I also had half my pay put in bi-weekly. They took the payments out every pay day.
Deal Addict
Jan 2, 2015
1633 posts
638 upvotes
Toronto, ON
UrbanPoet wrote: I got a unsecured line of credit from a credit union just last year.

I remember one of the terms and conditions of the loan is that I sign an agreement that allows them to garnish my bank account in the event of default or delinquency.

I thought... Okay... I can't foresee myself not paying back a loan. I mean... It might happen if I suffer a horrrrrrrifffic accident where all my arms and legs get chopped off... and i can't find work anymore.


They mentioned that fulfilling this loan condition helped them mitigate risk and approve it. Which makes sense. But is this a thing? It doesnt seem very common... or at least i never bumped into it.
I don't know about specific agreements, but this is very common. Many people suggest not borrowing money where you keep your money, to make this impossible to do (without a court order).

The OP may want to consider disability insurance or accidental death & dismemberment insurance.

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