Missouri Collection Laws

What rights do creditors have under Missouri law to collect debts from consumers?

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Bill's Answer: Answered by Mark Cappel

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.

Missouri Wage Garnishment

The most common method used by judgment-creditors to enforce judgments is wage garnishment. A judgment-creditor contacts your employer and requires the employer to deduct a certain portion of your wages each pay period and send the money to the creditor.

Wise Advice In most states, creditors may garnish between 10% and 25% of your wages, with the percentage allowed determined by state law. Garnishment of Social Security benefits or pensions for consumer debt is not allowed under federal law, but may be allowed for child support. See the Bills.com Wage Garnishment article to learn more.

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.

See the Dept. of Labor's Employment Law Guide - Wage Garnishment and the Dept. of the Treasury's Answers About Garnishments. Municipal and state employees may be garnished.

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.

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.

Lien

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.

Missouri 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 5 years (Section 516.120), and written contracts are 10 years depending on the circumstances (Section 516.110).

A Missouri judgment is valid for 10 years Chapter 511 and can be renewed Rules of Civil Procedure 74.09.

Wise Advice Collection agents violate the FDCPA if they file a debt collection lawsuit against a consumer after the statute of limitation expired (Kimber v. Federal Financial Corp. 668 F.Supp. 1480 (1987) and Basile v. Blatt, Hasenmiller, Liebsker & Moore LLC, 632 F. Supp. 2d 842, 845 (2009)). Unscrupulous collection agents sue in hopes the consumer will not know this rule.

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.

Recommendation

Consult with an Missouri attorney experienced in civil litigation to get precise answers to your questions about liens, levies, and garnishment in Missouri.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

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Comments (90)


Jerry E.
Seymour, MO  |  August 21, 2013
In May 2012, I suffered extensive medical problems which left me permanently and totally disabled, as determined by Missouri Department of Social Service (Medicaid), and by Social Security Administration Office of Disability Adjudication and Review. I am expecting to get my first SSI payment in September 2013. I now have a credit card company that has filed a lawsuit for $3800 I owe. I believe they cannot take my SSI money, but can they take my only vehicle ($2500.00 value)? I have to have this vehicle to have someone take me for medical treatments and doctor visits. I have no money to hire an attorney. Is there anything I can do? Thanks for your site! Thank you!
Bills.com
August 22, 2013
I am not a lawyer, so I can't give you legal advice, but I will share some information with you. Please do not take it as legal advice.

Missouri has a vehicle exemption of $1,000. Technically, I believe that it is theoretically possible for a judgment-creditor to force a sale of an asset, with the exempt amount remaining with the judgment-debtor and the rest going to the creditor. However, I do not believe that this is likely. It is important that you go to court, if you are sued, to explain your situation to the judge. I would be quite surprised if a person living on SSI would be forced to sell a low-value vehicle.

I recommend that you see if there is any free legal aid available. I did a quick search online for "legal aid Missouri," and see a number of organizations in various parts of Missouri. Find the one for the region in which you live and give them a call.
Pamela H.
Mexico, MO  |  May 16, 2013
Let's say I have a wage garnishment in Missouri. If I move to North Carolina, can the judgment-creditor still garnish my wages? North Carolina supposedly doesn't allow wage garnishment on most judgments.
Bills.com
May 16, 2013
North Carolina's wage garnishment law is a bit tricky. Generally, yes, North Carolina law does not allow wage garnishment. However, there's a big loophole in the law. Here's what Cherie Berrie, the Commissioner of Labor at the North Carolina Department of Labor wrote about this exception:
While the North Carolina courts are not permitted to garnish wages based on these debts, creditors in other states may be able to get an order of garnishment under their own states' laws. It is not a violation of the North Carolina Wage and Hour Act for an employer to withhold an employee’s wages if required to do so by law. If a court from another state issues a valid order under that state's laws requiring an employer to withhold a North Carolina employee’s wages for payment of a debt, the employer does not violate the North Carolina Wage and Hour Act by obeying that order.
Therefore, a judgment-creditor who received a judgment from a Missouri court will likely be able to enforce a wage garnishment order if you become a North Carolina resident.
Katrina M.
Weatherby Lake, MO  |  May 07, 2013
My boyfriend and I share a joint checking account. Yesterday I got my taxes and since he had a garnishment with a credit card they wiped out our checking account and savings. I want to know if since the garnishment was in his name and the tax money they took was in my name, is it legal for them to do this or is there a way to get my money back. We have been told different stories that there is something I can do about it and others including the people who took the money saying there is nothing I can do about it. Is there any legal action I can take to try to get my taxes back since I filed separately from him.
Bills.com
May 08, 2013
Under all state laws I am aware of, joint accounts have no special protection from creditors who have a valid judgment against one of the account holders. Even in terrible circumstances like you described, a judgment-creditor can ask your bank or credit union to garnish/levy your joint account.

However, some state legislatures wrote laws exempting a certain amount from account garnishment/levy. You mentioned Missouri. Consult with a Missouri lawyer who has consumer law experience. Ask him or her about Missouri Revised Statute Section 513.430, and if your tax refund fits any of the exemptions listed there, or elsewhere in Missouri law.

One last thought: Do not expect creditors to offer you accurate or complete legal advice. A Missouri lawyer of your choosing will advise you of your rights and liabilities.
Deb W.
Pine Lawn, MO  |  March 21, 2013
I had a judgement against me and I began paying May 2012. I had a home emergency and told my attorney I would have to miss some payments. He said he would inform the creditor/collection agency. My attorney has since passed away; the collection agency wiped out my checking and savings accounts. They say they cannot speak to me about the account because I have legal counsel...I don't. They told me to prove he is deceased; I sent them the obituary. Now they want me to prove he was a solo attorney (which he was). I can't prove it because he firm was closed. The collection agency won't talk to me.
Bills.com
March 21, 2013
Call the Missouri Bar Association and explain your situation. It is likely the Bar assumed custody of your lawyer's files when he passed away, and may either have possession of your files or assigned them to another lawyer. Proceed accordingly. If the Bar still has your files, ask the Bar to send the creditor a letter explaining your lawyer died, they possess your file, and that you are not represented to the best of their knowledge.

As an aside, the collection agent is being pedantic unnecessarily. If you can show your lawyer's dead, and you send the collection agent a statement that promises, "I am not represented by any lawyer," they should drop their objection to speak to you.
MARIE P.
Roach, MO  |  February 20, 2013
10 days before my insurance started, I came down with the flu. I went to our local convenience clinic only to be turned away due to stomach pain! They informed me I had to go to the emergency room because I could have appendix issues. I told them I had no appendix and was certain it was the stomach flu that had been circulating the area. I had no choice but go to the emergency room. I received 3 bills for that trip. The total was over 4,000.00 I paid off 2 and the last one down to 2,000.00 - I was repeatedly contacted for payment when making payments. I was informed that they would send to collections although I had been making payments. 100-500.00 at a time! I now have a lawsuit pending sue to the 2000.00 outstanding debt. My last payment was made in Feb 2012 for 500.00. Is it possible to be sued for a debt incurred by refusal for treatment from a hospital owned clinic & told to go to the ER for a higher bill? They even gave me an MRI!!! For the stinking flu!
Bills.com
February 20, 2013
You have two issues, and I'll answer the easier of the two first. Yes, a creditor can file a lawsuit against someone who fails to pay a debt as agreed. See the Bills.com article If I Pay a Small Amount on My Debt, Can I Be Sued? for a discussion if this issue.

The second issue is the incorrect diagnosis that led to the frighteningly expensive and unnecessary tests to determine your ailment. Of course, you know now you didn't need the tests, you must have had some significant doubt about what ailed you otherwise you would not have gone to the clinic and then followed their advice to visit the ER. What if you did not have the flu, but instead had a significant, life-threatening disease? That must have been in the back of your mind when you followed the clinic's advice.

I do not wish to sound unsympathetic. Your only option is to consult with a lawyer to discuss a malpractice and fraud case against the clinic and hospital for the mis-diagnosis. The lawyer will discuss your options, including your chances of success. The argument I just mentioned is one the opposing lawyer would make in response to your lawsuit, and it sounds compelling.
Carolyn C.
April 30, 2012
My in-laws had a credit card that they couldn't pay. The company went to court & got a judgment against them. Now they recieved a letter stating that all money in a checking account was taken to help pay the debt. They are both on Social Security & my father-in-law has a pension check. They have a second checking account at another bank. My mother-in-law is in bad health which is why they cannot pay the credit card. Her medications cost more than her S. S, check. She is on kidney dialysis. Can the creditor garnish their other account? They would file bankruptcy but my house is still in their name. They owned it but I bought it from them. I made payments to them instead of to a bank. What can we do about my house so that it is not taken?
Bills.com
May 02, 2012
First, consult with a lawyer who has civil litigation or consumer law experience immediately.

Second, the creditor may have levied the account improperly. See the Bills.com resource May a Creditor Garnish Social Security Benefits? to learn more.

Third, regarding your house, talk to your lawyer about your parents filing a quit-claim deed to put the title in your name.
Avatar
Carolyn C.
May 02, 2012
Thank you. I will check into it.
Holly D.
Jefferson City, MO  |  April 10, 2012
I went to court and settled with the company that I owe money to. I called and made arrangements to pay $50/month. I paid it once but I forgot to pay the next month's bill so they have been calling me. I was told my account is default and they want the WHOLE amount. I asked them if they could send me a bill to remind me every month that I owe money and they said NO. If they want money from me, shouldn't they be able to send me a bill. Sounds to me like that is an excuse, so people will forget and they can collect on the whole amount. They also told me that if I gave them a substantial amount they can put the debt on hold temporarily but I can't afford it.
Rodney U.
Oak Grove, MO  |  March 11, 2012
Both my elderly parents bought a home free and clear five years ago. They also had living with them my brother and sister who are both on Disability and elderly themselves. Both parents were in nursing homes for a couple of years until their recent passing, mother in 2010 then father in 2011. The state of Missouri paid for their care while in nursing home. They had no estate or savings, only their home. Can the state now come after the house, even though two disabled persons reside there, for we just received a letter stating that they will be looking into a judgement against the home. If they cannot, what happens when my siblings must themselves move to get care? Will we forever have to worry about the state taking the house? Thank you!
Bills.com
March 12, 2012
Rodney, you should speak with an attorney to get your questions answered. He or she will be able to examine all the facts, such as the ownership status of the home after your parents' passing, the timing of the state's claims, and what protections exist due to the fact that your siblings are disabled.
Sandy T.
Kennett, MO  |  February 23, 2012
I have been granted Innocent Spouse Relief by the IRS. The IRS is auctioning off my and my soon to be ex-husband's personal property, and have already sold 2 houses and a parcel of land. Can I receive half the proceeds from these sales? Thank you in advance, Sandy
Bills.com
February 23, 2012
Sandy, any assets that are jointly owned are extremely vulnerable to IRS seizure. They view each of you as having full rights to any jointly held assets. I recommend that you speak to an experienced attorney or Enrolled Agent ASAP. You may also benefit from speaking with your divorce attorney, to discuss whether you can hold your husband responsible for the losses you are suffering due to events that the IRS says you were not responsible for.
Timothy G.
Joplin, MO  |  February 21, 2012
I'm 65 and retired. My partner who I have lived with for 20 yrs is also retired. She wants to refinance her house to lower her payment, but is on social security. I'm also on social security. She has perfect credit and has never been late on anything but needs my income to qualify for the loan. I have unpaid irs tax liens from 1993 that are still on my credit reports that have never been removed or dropped off because of time. Now it's 19 yrs later all my other credit is good, How can I get the credit bureaus to remove these? The bank turned down her loan with me on it only because of the liens. wondering what the fastest was is if possible?
Bills.com
February 22, 2012
You tax lien should be unenforceable. The Collection Statutory Expiration Date (CSED) on the underlying tax debt that lead to the lien has almost certainly passed (though it could be possible that you waived your right to have the debt expire). Contact the IRS at 1-800-829-1040 to discuss the process for having the lien released. You can read about it in the area with the heading "Processing Taxpayer Requests for Lien Release" in Part 5. Collecting Process: Chapter 12. Federal Tax Liens: Section 3. Certificates Relating to Liens and Claims for Damages Under IRC § 7432.

Once you get official notice from the IRS that the lien is released, then you can contact the credit bureaus to have that reflected on your report. If your credit score is in good order, even if the bureaus are slow to update your report, your official release will be sufficient to prove to a mortgage loan underwriter that the debt no longer exists.
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