How to Avoid Wage Garnishments
It starts out easy enough, a few extra purchases here or there, a debt balance carried on your credit cards from month to month, but your credit card debt can quickly spiral out of control after a sudden loss of employment or other unexpected emergency. Maybe your balances simply climbed to high and your necessities outweigh the need to tackle your credit card debt. The danger is, ignoring your debts can ultimately lead to garnished wages and frozen bank accounts.
Before we begin to cover this topic in earnest, a quick note on our position on the matter of indebtedness. We feel it is a vital and personal matter of integrity an honor to do everything possible to meet the obligations we as consumers agree to. Every effort should be made to work out a repayment plan, create a mutually agreed arrangement, and tackle financial obligations head on. That being said, we are also well aware that situations arise that can be out of our control that spiral our fragile finances unexpectedly into ruin. It is our responsibility to fortify our finances to withstand the slings and arrows of outrageous fortune, but emergencies happen and it is vital to know fact from fiction when your debt becomes unmanageable.
The first thing to understand about credit card debt garnishment of wages is that it is a long, drawn out, process that does not happen over night. If you are currently, or soon to be, in default on your credit cards, wage garnishment is not the first recourse of the credit card companies. Debt wage garnishment is a legal recourse lenders have that requires court authorization.
The credit card companies are about as interested in going through the legal process to garnish your wages in the hopes of debt repayment as you are as the debtor of being dragged through the court. If you are sceptical, think about it a moment, entering the court system for debt collection is a costly matter for the credit card companies and there are a number of alternative collection methods they will employ prior to considering a court enforced wage garnishment procedure.
Your account with the credit cards will first go into a late payment period, followed by an extended default. In this stage you will receive mailings, and in some case phone calls from the credit card company to check in with you. In this stage the debt holding card companies are simply inquiring as to whether perhaps there was a change of address or if an error occurred with payment. At this stage you typically will not have entered a true debt collection stage.
The time period varies based on the policy of the credit card you hold the debt with, but typically after an extended default period, your debt will be sold or assigned to a credit collection agency. Creditors are required to notify you of the sale of your debt, and from this point on you will be dealing with the new debt holder. Typically these will be the credit collectors that have earned a reputation for engaging in a campaign of harrassing phone calls, letters, and embarrassing contact of your friends, neighbors and family in an effort to collect on your debt.
It is up to the creditor, but typically, as a final and last resort on large debts, the holder of the debt will seek a legal judgement against you and ultimately wage garnishment. Again, the court action will not be a surprise as the creditors are legally required, universally by state law, to notify you of the pending legal action to take place. But to repeat, the hassle of filing a lawsuit is great, and for small credit card debts collectors often will forego the garnishment process altogether, it being cheaper to just attach the debt to your credit score and give up.
The Court Garnishment Process
Once the court wage garnishment legal process begins, the debt is declared, the court decides, creating a judgement for or against you the borrower. In the case that the judgement finds you liable for what you owe, they have the legal right to 'attach' the obligation to your wages, placing a garnishment on what you are paid. Your paycheck is reduced by the amount of money garnished from your income and paid to the creditor holding the debt. It is often believed that credit card debt does not qualify for wage garnishment, but this is a commonly held myth, credit card debt wage garnishment is possible, it is just not as common as tax judgements or other debt garnishments because of the lower average amounts owed.
Title III of the consumer credit protection act is intended to protect the consumer and prevents the amount of money that can be witheld by a wage garnishment to 25% of the disposable income of the consumer. So if you are earning a paycheck of $1000 monthly it is possible you can have up to $250 in wages garnished from your paycheck each month until your judgement debt is payed off. The protection act also protects your retirement payments, unemployment, state and federal deductions as well as social security deductions from being reduced by the debt wage garnishment levied.
In addition to attached wage garnishments, your outstanding credit card debt can lead to bank account nonwage garnishments. Essentially, a nonwage garnishment applies in circumstances where the consumer is not employed and the court goes after your bank account balances for repayment of the debt owed. In the case of nonwage garnishments there are a number of exempt and non exempt monies that are exposed to the verdict of the court. Laws vary from state to state regarding nonwage garnishment rules so it is best to consult your resident state laws for an accurate accounting of what can and cannot be garnished in your state.
Facing Garnishments
The garnishment process involves the court system in your state as we discussed above. When you are dealing with the legal system, it is vital to know your rights and seek professional representation. Working with an experienced attorney or law firm to represent your rights is vital to ensure a just and swift encounter with the courts. A credit card debt wage garnishment is never pleasant, but dealing with the problem head on and getting legal counsel will limit any additional unpleasant surprises.
