condition of loan... sign a garnishment agreement?

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Jun 6th, 2018 7:47 pm

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Jun 5th, 2018 7:38 pm

UrbanPoet [OP]: Deal Expert; Jan 27, 2004; 50527 posts; 14879 upvotes; ONTARIO

Jun 5th, 2018 7:38 pm

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.

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5 replies

Jun 6th, 2018 10:02 am

Manatus: Deal Fanatic; Mar 21, 2010; 6591 posts; 3764 upvotes; Toronto

Jun 6th, 2018 10:02 am

Is it an account held with the same credit union?

Jun 6th, 2018 11:01 am

TheMaterial: Sr. Member; Dec 15, 2015; 705 posts; 536 upvotes; Toronto

Jun 6th, 2018 11:01 am

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

Jun 6th, 2018 12:08 pm

skeet50: Deal Fanatic; Jan 15, 2017; 5310 posts; 5427 upvotes; Ottawa

Jun 6th, 2018 12:08 pm

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.

Jun 6th, 2018 7:44 pm

User455957: Deal Addict; Nov 8, 2017; 1556 posts; 888 upvotes

Jun 6th, 2018 7:44 pm

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.

Jun 6th, 2018 7:47 pm

FoFai2015: Deal Addict; Jan 2, 2015; 1633 posts; 638 upvotes; Toronto, ON

Jun 6th, 2018 7:47 pm

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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