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Advice on Wages Being Garnished for an 8 year Old Debt - The Bills.com Blog
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Advice on Wages Being Garnished for an 8 year Old Debt
Friday, Feb 8, 2008
Question: Bill, My ex-husband is telling me that his wages are being garnished for a loan he had on a car he bought in 1997 when we were married. The car was a 1995 model. The car was repossessed in 1999, a few months after the divorce. He says that they have added the minimum interest rate to the loan over all of these years and that he now owes $30,000 on a loan that was around $17,000 to begin with. He says his credit is destroyed. I want to know if the bank can do that? I thought after 7 years your credit is cleared. I have had my credit cleared after 7 years of a small bill from my divorce days. I have never heard of adding interest to an unpaid debt over 8 years of non-payment. Is there any truth to this? Thanks!
Answer: Generally speaking, a creditor can garnish your wages only after obtaining a judgment against you in your local courts. In your case, once your vehicle was repossessed, the creditor would have sold it in an auction and applied the proceeds towards the payment on your husband's loan. Your husband would also be held responsible for any balance that remained (now called the deficiency balance).All states have a body of statutes in their codes of law called, "Limitations of Actions," commonly referred to as the statutes of limitations. The idea behind these laws is that
we as a society have decided that we don't want old debts hanging around forever; we want people and businesses to be able to move on with their lives without worrying about being sued. The length of time a creditor has to sue you depends on your state of residence and the type of debt. For example, many states allow longer for creditors to file suit to collect on closed ended consumer loans than on credit card debts. Most states give credit card issuers 3 to 4 years to file suit after default, but some states allow as many as 10 years. Check out BCSalliance.com. This site has more information about statutes of limitations and a list of limitations by state.
If your creditor filed the suit before the statute expired then they are justified to claim any interest charges that were due since the time of the last payment. I strongly suggest that you pull a credit report for your husband and inspect it in detail. If a judgment is already reported, then there is nothing much
If your creditor filed the suit before the statute expired then they are justified to claim any interest charges that were due since the time of the last payment. I strongly suggest that you pull a credit report for your husband and inspect it in detail. If a judgment is already reported, then there is nothing much
you can do other than honor the payments that you have committed to. You can obtain a free copy of your reports at AnnualCreditReport.com. In case there is no judgment and if the statute of limitations has expired then you are not required to pay on the debt, but bear in mind that the creditor can still continue their collection efforts even though the statute has expired, it just gives you grounds to dismiss it in case they do take your husband to court.
By federal law, all debts must be removed from a credit report after seven years (US Code Title 15, §1681c) and bankruptcies after ten. Remember that just because a debt is removed from a credit report that does not mean the statute of limitations has passed. Federal credit report laws and a state statute of limitations laws are separate and independent from each other.
I wish you best of luck in resolving this old debt and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
By federal law, all debts must be removed from a credit report after seven years (US Code Title 15, §1681c) and bankruptcies after ten. Remember that just because a debt is removed from a credit report that does not mean the statute of limitations has passed. Federal credit report laws and a state statute of limitations laws are separate and independent from each other.
I wish you best of luck in resolving this old debt and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
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1. Posted by Samantha on Tuesday 17th March 2009 17:14
An attorney has filed to have my husbands wages garnished for a car that was repossessed when he was 18-19 years old. (Ten years ago!) We live in Maryland. He did call earlier this year to work out a pymt plan with the attny but with added fees and interest, they would only take full payment, which we can't afford. What can we do?
2. Posted by Bill on Wednesday 18th March 2009 15:45
Be careful and don't believe everything the attorney tells you. In order for them to garnish your husband's wages, they need a court ordered judgment. Did your husband ever receive a notice to appear in court? If he did receive one, and ignored it, then the court might have passed a default judgment against him. you should ask your husband to check on his credit report to see if a judgment is showing up. If there is none, then you might not even have to pay this debt as I am guessing that the statute of limitations has long since passed for this debt.
3. Posted by Jo Ann Davis on Wednesday 1st April 2009 12:00
I had a sear credit card in the 1990s. I lost my job and couldn't pay. Sears passed the debt to several agencies. It ended up with a collection attorney who filed a garnishment in 1998. I have spent most of my time unemployed and currently am unemployed again. Is this garnishment renewable? Do I have any other recourse? I have to appear in court tomorrow, but I don't want to go without a lawyer? Does this collection attorney have any legal holdings on me and if so what? Thanks
4. Posted by Bill on Wednesday 1st April 2009 15:36
Even if you do not have an attorney right now, do not miss the court appearance at any cost. Yes, the creditor can renew the garnishment until they get paid. The only recourse that could possibly protect you from this is to file for bankruptcy.
5. Posted by kris on Tuesday 28th April 2009 14:30
i purchased a car in 2001 & let the car go back.the car was repo & was sold @ auction.i didn't hear anything about this car again until last year when i started receiving letters from a lawyer group here in ok.,the puchase was made when i was living in tx.i moved to ok in 2005.i also received a letter from a judge in tx in the county i was living that a suit had been dropped for failure to prosecute by this lawyer firm in tx.i received this letter after being contacted by firm in ok.this debt is 8 years old...can they still come after me?
6. Posted by Brent on Tuesday 28th April 2009 14:44
Seems that the debt is way past the statute of limitations in both TX and OK, but this does not mean that they have to stop trying to collect. If they ever go to court about this matter, the judge would dismiss the case being that the debt is pass the statute of limitations. You can check for the statutes here. Consult with an attorney, just to be safe.
7. Posted by Bobbi on Monday 28th September 2009 15:22
Bill, my husband and i had a car repossesed a little over a month ago & it has already been sold in an auction. We were told by a friend we should be able to set up arrangements on the outstanding bill. We intend to. But my question is, how long after it's sold before they can garnish his wages?
8. Posted by Bill on Monday 28th September 2009 16:17
First, read these two replies to other readers who had similar questions: "Consequences of Credit Card Default" and "Collections Agencies, Collections Laws and Your State's Statute of Limitations." I know you mentioned a deficiency balance and the first article I mentioned discusses credit card debt. For the most part, all unsecured consumer debt is treated the same under the law. Next, I recommend you review your rights under the Fair Debt Collection Practices Act. Finally, I recommend you study the Bills.com article "Debt Negotiation and Settlement Advice" so that you understand how to negotiate this debt when the collection agent starts calling you.