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

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: Thank you for the question. 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 http://www.bcsalliance.com/y_debt_sol.html. 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 you can do other than honor the payments that you have committed to. You can obtain a free copy of your reports at www.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.

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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