Managing Debt

Can a Debt Collector Garnish My Wages?

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If you’re late on your credit card payments, should you be worried about whether a debt collector can garnish your wages?

A debt collector can, in fact, garnish your wages, but only if it’s legal to do so in your state. For this to happen, a lawsuit must be filed against you. A possible outcome from such a lawsuit is a judgment against you to garnish property or wages.

When wages are garnished, the creditor receives money deducted from the debtor’s paycheck to apply towards the delinquent debt. Wage garnishment is most common in delinquent tax situations and unpaid child support, but credit card debt can also lead to wage garnishment. When another asset is involved in the garnishment, such as a property, a lien is placed on the asset for the judgment amount. When the property is sold, the money obtained from the sale is first distributed to creditors.

If you default on a credit card, the credit card company will typically sell the debt to a collection agency. If you are unable to pay the collection (settle the debt for less), the collection agency may try to sue you, file a judgment against you, or possibly garnish your wages in order to collect the debt. Again, they can only garnish your wages if it’s legal in your state. To be sure, check with your state attorney general’s office to find out if wage garnishment is legal in your state. You can find out if you have a judgment against you by pulling your free credit report at AnnualCreditReport.com. You can monitor your credit once a month for free using the Credit Report Card, which can alert you to a lien or judgment that has been filed against you if your score drops.

If you are struggling to make payments, the best thing to do is call your credit card company and try to renegotiate your payments to see if there are any other options available. Keep in mind that not paying your bill may damage your credit for several years.

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  • http://www.kennethballard.com Kenneth

    A creditor can garnish a debtor’s wages *only* after a creditor has sued the debtor and been awarded a judgment against the debtor. A judgment is merely an order to the debtor by the Court to pay a particular amount to the creditor. That’s it. A debtor can negotiate payment of the judgment in the same way they could negotiate payment of the original debt — though with a judgment the amount of the debt has likely increased as the creditor will add on Court and attorneys fees.

    After the creditor has been awarded the judgment, the creditor may have to wait a particular period of time after the judgment has been entered into the Court record before they can attempt to collect on the judgment, but the debtor does not have to wait to begin paying on it, though paying on the judgment may eliminate the debtor’s rights to appeals and supplemental motions.

    Again, the judgment is only a Court order. It is not tacit authorization for the creditor to start garnishing accounts and wages, putting liens on property or outright seizures, yet many are under that delusion. Anything else the creditor attempts to do to compel payment or secure payment requires going through the Court and filing supplementary motions after the judgment has been entered into the record. Further, what they can seize and the amount of wages that can be garnished is limited by statute as well, but none of that can happen absent a Court order.

    In other words, a creditor cannot just start garnishing your wages because you fell behind on your payment. A creditor cannot just seize your car or put a lien on it, and same with any other property you own. They must sue first and be awarded a judgment against you, then file additional motions for liens, seizures and garnishments.

    A collection agency won’t just “file a judgment against you”, because they cannot do that. Only a Court can do that, and a Court can only do that through a properly serviced lawsuit. And if there is a judgment on your credit report for a lawsuit you do not recognize, there are legal processes you can go through to get that judgment nullified and removed from your credit report. No judgment should be on your credit report that did not originate through a lawsuit on which you were properly serviced.

    Which brings up another point: if you’re sued, show up to Court. If you are served papers for a lawsuit, do not ignore them, even if you believe you were mistakenly served.

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