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Attorney Collections and Garnishing Wages
Question: I have an old credit card (last payment was in 2004) they are contacting an attorney to collect an over $2000 debt. They said they are going to contact the HR department where I work and garnish my wages. Doesn't this have to go to court?
Answer: In almost all cases involving non-governmental debts, a creditor must file a lawsuit against the debtor and obtain a judgment beforethe debtor’s wages can be garnished. In addition, the lawsuit usually must be filed in the county where the debtor currently lives, where the debtor lived at the time the account was opened, or where the contract creating the debt was physically signed. There are two primary ways a judgment can be issued. First, if you fail to respond to a lawsuit that has been filed against you, the court will likely issue a “default judgment” against you. Second, if you respond to the lawsuit, but the judge thinks you owe the money based on the evidence, he can issue a judgment against you.
Before I go into more detail, if you want a free debt consultation to help you deal with these debt problems and the attorney collections, you can apply with one of Bill's approved debt help partners .
Once a creditor has obtained a judgment against you, it can request that the court order your employer to withhold a certain portion of your wages to repay the judgment. The amount of your wages that can be withheld varies by state, but no state allows more that 25% of a debtor’s net wages to be garnished to repay a judgment.
If you are sued by a creditor, you should retain an attorney in your area to protect your interests.
The threats that you describe in your question are a common technique employed by collectors to intimidate debtors. A creditor, or anyone else, can contact your employer to request information regarding your employment status. Frequently human resources departments that are not familiar with the law will reply to these requests, confusing them with court ordered garnishments. If your employer notifies you that it has received an employment verification request from a creditor, you should tell your employer that they are not required to respond to this type of request, and ask that they not disclose your employment status.
If the collector contacting you is not a law firm licensed to practice law in your state, the collector may be breaking the law by threatening to garnish your wages. Because collection agencies cannot generally file lawsuits themselves, they cannot threaten to do so. Nor is a collector in a position to analyze the law regarding wage garnishment in your state. The Federal Trade Commission offers a wealth of information regarding
the federal laws regarding debt collection practices, available at http://www.ftc.gov/bcp/conline/pubs/credit/fdc.shtm
If you feel that a collector has broken the law, you can file a complaint with the FTC or your state Attorney General’s office, or file a lawsuit against the collector for violation of the Fair Debt Collections Practices Act, the primary federal law regulating debt collectors.
The Fair Debt Collections Practices Act also requires collectors to stop calling you if you notify them in writing to cease communication. While a request to cease communication will not make the debt go away, it can end harassing credit calls. Be warned that sending a cease communication request can sometime lead to creditors filing a lawsuit since they are no longer able to conduct traditional collection activities. You must weigh the stress being caused by the calls you are receiving against any risk that sending a cease communication request may cause.
I hope the information provided helps you Find. Learn. Save
Best,
Bill
www.bills.com
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1. Posted by Robin Ellison on Monday 24th September 2007 13:48
Question I was told they can't garnish your wages if you owe a hospital bill, is this true?
2. Posted by Nate on Thursday 27th September 2007 16:53
That is not correct, one can still be garnished. The 2 main options, other than getting the creditor to agree to an affordable repayment plan, are: Option 1: File Chapter 7 bankruptcy. The first option is to file a Chapter 7 bankruptcy, which would wipe out all unsecured debt, including medical debt. The biggest problem with doing this is that, once a person files bankruptcy, he or she cannot do so again for six years. If this person should get sick during that six year period, there might be nothing to save them from wage garnishments, judgments or liens to recover future unpaid medical debt. Option 2: If you have a limited income, when the creditor sues you, go to court and have your income and other property declared exempt from the creditor and avoid filing bankruptcy. For example, those who live solely on social security (or have a very limited income) can defend such a suit by proving to the judge that their social security check is their only source of income and cannot be taken by creditors. Almost all states exempt income under a certain amount to protect those with low incomes from creditors. For example, your state might have legislation on the books that says a creditor can only seize any net income over $250.00 per week. If you make $250 or less per week, your income is exempt. Your state might put a cap on how much of your wages can be garnished, perhaps no more than 15 percent. For more information on wage garnishment laws specific to your state please visit: http://www.bcsalliance.com/y_debt_statelaws_garnishments.html
3. Posted by julia langham on Wednesday 5th March 2008 04:51
Can a debt collection agency refuse a payment plan? We owe 3100.00 in medical bills. I said we could pay 200.00 a month. The collector said they needed at least 300.00 a month or they would garnish my wages and get 400.00 a month. Can this be done?
4. Posted by Bill on Wednesday 5th March 2008 08:10
As long as the payment is past due, the collection agency can more or less dictate the terms of the payment plan. The onus is on you to convince them that as per your present financial condition $200 is all you can pay. The agent might talk about wage garnishment and such, but that cannot happen unless they file a suit in court and get a judgment against you. Realistically speaking, it is not likely that they will do so on a debt of $3100 but the possibility is there. You need to keep up your efforts to convince them. You might also try to contact the original creditor/medical facility to see if they will accept your payment terms, it’s worth a try.