A collection agent or law firm that owns a collection account is a creditor. A creditor has several legal means of collecting a debt. But before the creditor can start, the creditor must go to court to receive a judgment. See the Bills.com resource Served Summons and Complaint to learn more about this process.
The court may decide to grant a judgment to the creditor. A judgment is a declaration by a court that the creditor has the legal right to demand a wage garnishment, a levy on the debtor's bank accounts, and a lien on the debtor's property. A creditor that is granted a judgment is called a "judgment-creditor." Which of these tools the 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. However, several states, including Texas, Pennsylvania, North Carolina, and South Carolina, do not allow wage garnishment for the enforcement of most judgments. In several other states, such as New Hampshire, wage garnishment is not the "preferred" method of judgment enforcement because, although possible, it is a tedious and time consuming process for creditors.
In most states, creditors are allowed to garnish between 10% and 25% of your wages, with the percentage allowed being determined by each state.
Missouri garnishment rules are found in Missouri Revised Statutes: Section 525. The maximum amount that may be held from a person's weekly wages, after withholdings required by law, is the lesser of: 1) 25% of the wages; 2) 10%, if the person is head of a family and a Missouri resident, or; 3) The amount by which the weekly earnings exceed thirty times the federal minimum hourly wage. Note that child support garnishment may be subject to a higher percentage of deduction.
Generally speaking, 401(k) or other retirement funds are exempt from garnishment. It is advisable to have those funds specifically deposited into a separate bank account if you are concerned about garnishment on those payments.
If you reside in another state, see the Bills.com Wage Garnishment article to learn more.
Levy Bank Accounts
A levy means that the creditor has the right to take whatever money in a debtor's account and apply the funds to the balance of the judgment. Again, 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. In some states levy is called attachment or account garnishment. The names may vary but the concept is the same.
In Missouri, administrative levy is allowed under for recovery of taxes and unpaid child support. Under Missouri Supreme Court Rule 76.07. When Levy Creates Lien a levy creates a lien upon personal property.
If you reside in another state, see the Bills.com Account Levy resource to learn more about the general rules for this remedy.
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 refinance 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.
Missouri laws governing liens are found in Missouri Revised Statute Chapter 429, Chapter 430, and Chapter 513. Judgment lien rules are found in Chapter 511, and Missouri Rule 74 -- Judgment Orders and Proceedings Thereon. In Missouri Section 511.360. The lien of a judgment or decree shall extend as well to the real estate acquired after the rendition thereof, as to that which was owned when the judgment or decree was rendered. Such liens shall commence on the day of the rendition of the judgment, and shall continue for ten years. Succinctly, liens are allowed for contractors. Judgments can be enforced as a lien on the defendant's property. Missouri
If you reside in another state, see the Bills.com Liens & How to Resolve Them article to learn more.
Statutes of Limitations
Each state has its own statute of limitations. Statute of Limitations for Missouri are found in Missouri Revised Statute: Chapter 516. The statute of limits for open accounts (credit cards) is five years (Section 516.120), and written contracts are 10 years depending on the circumstances (Section 516.110).
Missouri Payday Loan
See the Bills.com resource Missouri Payday Loan to learn more about the rights consumers in Missouri have regarding payday loans, and options for resolving them.
Consult with an Missouri attorney experienced in civil litigation to get precise answers to your questions about liens, levies, and garnishment in Missouri.
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