To obtain a legal wage garnishment, this creditor (or its attorney) had to obtain a judgment against you, which means that it had to file a lawsuit and, at least in theory, serve you with a copy of the lawsuit with sufficient notice to allow you to respond, initially with a written response, and subsequently by appearing in person or by attorney in court.
The facts in your question make me think one of two events transpired. My first guess is a judgment was entered against you many years ago. This lawyer is now working to collect on an old unpaid judgment, which was entered against you at some point soon after the defaulted car loan. Perhaps you were too busy with the divorce or other things going on in your life to even realize that you had been sued at the time. Perhaps you were never given adequate notice of the lawsuit and judgment.
My second guess is it is possible, though unlikely, the lawyer did not have a judgment and sent your employer a notice of garnishment, which your employer honored. Such a practice would be illegal on the part of the lawyer and negligent on the part of your employer to follow an illegal garnishment order. Again, this sequence of events is pure speculation on my part, but it also fits the facts you provided.
There are three reasons I believe the first scenario I outlined above -- it is an old judgment you did not notice or recall -- is close to accurate. First, the statute of limitations in Florida for written contracts, such as an auto loan, is five years and the statute of limitations for the collection of a judgment is 20 years. I sometimes see debt purchasers pursue people for old non-judgment debts, but rarely for ones this old, and almost never with the involvement of an attorney because no legal action can be taken to enforce such debts. The only reason that I can think that this attorney would be contacting you about this debt would be if it were an old judgment.
Second, the speed with which the attorney filed a wage garnishment with your employer leads me to believe that the creditor already had a judgment against you. The court process takes a fair amount of time, and it would be nearly impossible for a creditor to file a lawsuit, obtain a judgment, and begin garnishment within a month, the amount of time that has passed since you received the demand letter from the creditor's attorney. However, if the attorney already had a judgment and had the garnishment documents drawn up, the attorney could have sent them to your employer immediately upon receiving your response refusing to pay the amount owed. This second scenario would better explain how this attorney was able to start garnishing your wages in such a short amount of time.
Third, the amount of the debt, and the discrepancy between the $7,000 claimed in the letter and the $23,000 demanded when you called the attorney's office, makes me think that this may be an old judgment. The original judgment amount may have been for $7,000, which is why that amount was quoted in the attorney's recent letter. However, Florida law allows judgment creditors to charge 10% interest on unpaid judgments, which is why, after 16 years, the balance owed has increased so much. The 10% interest alone would account for over $11,000 of the additional money the creditor claims you owe, and with attorney's fees and court costs, I can imagine how this debt could have balloon from a $7,000 judgment 16 years ago to a $23,000 debt today.
Recommendation
The important question is what can you do about the garnishment.
Start by learning if a judgment was filed against you. The only way to know for certain is to contact the clerk of the courts in county where you lived at the time a judgment would have been entered for this debt. Also, if you contact the attorney's office and ask if their client has a judgment against you, they should be able to tell you and may provide you with a copy of the document.
Once a judgment has been entered, it can be difficult to prevent a creditor from proceeding with garnishment, bank account levies, or other means of enforcement. (See the Bills.com document Florida Collection Laws to learn more about your rights and liabilities.) However, one of the few ways judgment enforcement can be stopped effectively is for the judgment-debtor to file for bankruptcy protection.
If you qualify to file a Chapter 7 bankruptcy case, you may be able to discharge the debt entirely. It is never too late to seek bankruptcy protection on an outstanding judgment. The fact that so many years has passed since this judgment was issued should have no effect on its dischargeability in bankruptcy. Consult with an experienced bankruptcy attorney in your area to learn if filing for bankruptcy protection is a viable option in your case.
Visit the Bills.com bankruptcy page for more information about bankruptcy and how it may be able to help you.
I hope this information helps you Find. Learn & Save.
Best,
Bill
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Under Ohio law, if your Discover credit card agreement spelled out you were agreeing to a 19% post-judgment interest rate, then Ohio allows the court to award that much. If there's no post-judgment amount listed in your credit card agreement, then the court must award the interest rate determined by the Ohio Tax Commissioner.
Consult with an Ohio lawyer who has consumer law experience if you think the interest rate set here is contrary to Ohio law.
You mentioned your state's statute of limitations. In all but two states, the time expiring on a statute of limitations clock for breach of contract does not mean the plaintiff is barred from filing a lawsuit. The statute of limitations gives you an affirmative defense you can raise during a trial to ask the court to dismiss the case. See the Bills.com article Statute of Limitations to learn more about this issue.
You mentioned a judgment. A judgment is given to a plaintiff after a successful lawsuit. If the lawsuit you mentioned was dismissed, then that lawsuit would not result in a judgment.
Credit reports are incomplete. Let's say you borrow $10 from a co-worker for lunch, which you repay a day or two later. That loan will not appear on your credit reports because your coworker never bothered reporting it to the big-three consumer credit reporting agencies (CRAs). Some lenders, such as buy-here pay-here auto dealers, have a reputation for not reporting their transactions to the CRAs. They are under no obligation to do so, but if they do, their reports must be accurate and timely. The same is true for judgments, in that not all find their way into consumer credit reports. Therefore, do not rely on the fact that a collection account, judgment, bankruptcy, or foreclosure does not appear on a credit report to mean those events never happened.
Your question really asks for a prediction of how the creditor (or collection agent if the judgment-creditor sold the account) will react to her opening a negotiation to resolve the account. My first reaction is to invoke the cliche, "Let sleeping dogs lie." If the collection agent isn't actively pursuing the account, it is telling her it doesn't care about the account. On the other hand, if the collection agent is calling and sending letters, then she should negotiate a settlement.