A lender, collection agent or law firm that owns a collection account is a creditor. The law gives creditors several means of collecting delinquent debt. But before a creditor can start, the creditor must go to court to receive a judgment. See the Bills.com article Served Summons and Complaint to learn more about this process.
The court may grant a judgment to the creditor. A judgment is a declaration by a court the creditor has the legal right to demand a wage garnishment, a levy on the debtor’s bank accounts, a lien on the debtor’s property, and in some states, ask a sheriff to seize the debtor’s personal property. The laws calls these remedies. A creditor granted a judgment is called a judgment-creditor. Which of these tools a judgment-creditor will use depends on the circumstances. We discuss each of these remedies below.
The most common method used by judgment-creditors to enforce judgments is wage garnishment, in which a judgment creditor would contact the debtor’s employer and require the employer to deduct a certain portion of the debtor’s wages each pay period and send the money to the creditor.
Louisiana has two types of garnishment procedures: wage and bank. Louisiana exemptions is the limitation of wage garnishments to 25% percent of the judgment-debtor's adjusted disposable earnings (Louisiana Revised Statute 13:3881).
A levy means the creditor has the right to take non-exempt money in a debtor’s account and apply the funds to the balance of the judgment. The procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state’s laws to find if a bank account can be levied.
The list of property exempt from seizure by garnishment under Louisiana law is long and similar to the federal exemptions. Funds in a bank account are subject to garnishment as long as the funds are not exempt under Louisiana Revised Statute 13:3881 or any other law. Garnishment fees can range from $40 to $500.
A lien is an encumbrance — a claim — on a property. For example, if the debtor owns a home, a creditor with a judgment has the right to place a lien on the home, meaning that if the debtor sells or refinances the home, the debtor will be required to pay the judgment out of the proceeds of the sale or refinance. If the amount of the judgment is more than the amount of equity in your home, then the lien may prevent the debtor from selling or refinancing until the debtor can pay off the judgment.
In Louisiana, a judgment lien can be attached to real estate only. Here are personal property exemption amounts for Louisiana residents' property necessary to the exercise of a trade, calling, or profession: (Revised Statute 13:3881)
Here are personal property exemption amounts for Louisiana residents' habitat property, as defined by Article 223 of the Louisiana Civil Code:
If you reside in another state, see the Bills.com Liens & How to Resolve Them article to learn more.
Each state or commonwealth has its own statute of limitations on civil matters. In Louisiana, a statute of limitations is called a "prescriptive period." Here are some of Louisiana’s prescriptive periods for consumer-related issues:
|Credit card||3||Civil Code 3494|
|Spoken contract||10||Antoine v. Franichevich, 167 So 98 (La. 1936)|
|Written contract||10||Civil Code 3499|
|Mortgage contract||3||Civil Code 3494|
|Promisory note||5||Civil Code 3498|
|Judgment||10||Civil Code 3501|
When the statute of limitations clock starts depends on the circumstances and the particular statute. In most states, the clock starts when the action accrues. In Louisiana, the clock starts when the error that causes the breach is discovered, and not when the consequences of the error are discovered. A prescriptive period clock may be paused (called "tolled") under some circumstances, or renewed.
Louisiana law allows payday loans of up to $350 for 14 days or less. The Louisiana Deferred Presentment and Small Loan Act (PDF) allows a lender to charge $20 for every $100 borrowed, plus a $10 fee for documentation. The total amount of the fees cannot exceed $55 when the amount borrowed is $220 to $350. The Louisiana Office of Financial Institutions regulates payday lenders.
Can a Louisiana resident be charged with a crime for failing to repay a payday loan? Generally, no. Under the Louisiana Deferred Presentment and Small Loan Act: "A [payday lender] shall not: ... Threaten any customer with prosecution or refer for prosecution any check accepted as payment of a deferred presentment transaction and returned by the lender's depository institution for reason of insufficient funds" (LSA-R.S. 9:3578.6(A)(5)). See the Louisiana Office of Financial Institutions staff interpretive letters (PDF) regarding this issue.
A lender will foreclose judicially in Louisiana. Under Louisiana's anti-deficiency law, a deficiency judgment is only available if the property is appraised prior to foreclosure sale and lender uses executory proceeding. See Louisiana Code Title 10:9-629 to learn more.
Collection agents must register with the Louisiana Secretary of State. Louisiana's collection law, called the Louisiana Consumer Credit Code, mirrors some of the rules in the FDCPA with three exceptions. In Louisiana, original creditors are covered by Louisiana's collection laws. Second, collection agents may not contact any person about the debt that is not living or present in the debtor's household. This means the collection agent or original creditor cannot contact the your employer or neighbor.
The third exception concerns how often a collection agent or creditor may contact a Louisiana resident once you send a written notice by registered or certified mail requesting the creditor cease communications. The creditor must stop communications once it receives a cease communications notice. However, there are six exceptions to this rule. The creditor may:
To learn more about the Louisiana Consumer Credit Code, see La. Rev. Stat. Ann. § 9:3562.
Consult with a Louisiana lawyer who is experienced in civil litigation to get precise answers to your questions about liens, levies, garnishment, and foreclosure.