Debt Collection and Garnishments

When the letters and phone calls from collection agencies start coming in, avoidance may seem like the best option, but ignoring the communication will only work for a little while.  Before you know it, you may start receiving court documents and eventually a notice of garnishment.  Having a judgment against you, allowing a creditor or collector to garnish spells trouble for the consumer. 

Consumers often are not even aware that a garnishment is taking place until they see funds withheld from a paycheck or bank account.  Garnishment, a court order directing that your money or property be taken to satisfy a debt owed to a creditor, is a means of collectors taking money from you when you refuse to pay off your debts.  The most common form of garnishment in the debt collection industry is wage garnishment but other forms are garnishment are available to collectors who receive a judgment against you. 

Garnishment may come as a surprise, but if you did not practice the art of avoidance every time a collector reached out to you, you should be fully aware of when it’s going to happen and will have an opportunity to defend yourself in a court of law.  When you owe a debt, a collector’s first course of action is to reach out to you by mail and phone.  Eventually when a debt is not paid after efforts have been made, collection agencies turn to our legal system and can file suit against you.  If a collector is successful and receives a judgment in a court of law, the next step is to pursue the assets of the debtor to satisfy a judgment – this is known as a garnishment.  Most collectors opt for wage garnishment.  This is when a collector takes money directly from your paycheck by contacting your employer and when it’s payday, you will notice your paycheck has taken a serious hit. 

As a consumer, always act.  If you initially chose to ignore the collection calls, once you receive notice of a lawsuit, respond accordingly.  While collection efforts can often be overwhelming, ignoring them can result in a judgment being rendered against you.  Garnishment means you will be stuck paying more than you originally owed at a percentage of your salary which is out of your control.  Judgments can take “overwhelming” to an extreme.

Judgments and garnishment can usually be avoided if a consumer handled the debt in the initial collection stages.  That being said, not all funds can be garnished.  If your wages are being garnished, only a certain percentage of your take home pay can be withheld.  Both state and federal law limits the amount of earnings that may be deducted from your paycheck to the lesser amount of 25% of your disposable earnings or 30 times the federal minimum wage.  Disposable earnings are the portion of your income that you are free to spend or invest as you see fit, after payment of taxes and other obligations.    

If a collector decides you are not gainfully employed as a debtor and a  judgment is rendered against you, a collector may use bank account garnishment.  Non wage garnishment or bank account garnishment begins when a collector requests your bank account be frozen to payoff a judgment.  There are funds in your account that are exempt from garnishment including, social security, disability, veteran payments and student loan payments.  If the only income you receive is from social security, veteran payments, or a retirement pension, that money is safe.  If you are receiving money from employment, but the garnishment sets you back too far to be able to handle your expenses, then bankruptcy may be your only option.  

If you believe your rights have been violated relating to an order of garnishment contact SmithMarco P.C. for a completely free case review.