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Behind On My Loan Payments

I am living paycheck to paycheck and unable to make my monthly loan payments. Will my wages be garnished?

I took out a HSBC loan about 13 years ago for $4000.00. I got behind on payments and I am a single mother working 2 jobs, living pay check to pay check. They have turned this over to a law firm for collection. The law firm called and said the amount is now $7000.00. They asked if I wanted to pay the balance, half of it, or make a down payment and then $250.00 per month after. I offered $100.00 monthly, and they did not accept. He then said that If I can not pay, my wages would be garnished. Can they do this to me? Please help.

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Bill's Answer
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Bills.com | Find Learn Save

In almost all cases involving non-governmental debts, a creditor must file a lawsuit against the debtor and obtain a judgment before the debtor’s wages can be garnished. In addition, the lawsuit usually must be filed in the county where the debtor currently lives, where the debtor lived at the time the account was opened, or where the contract creating the debt was physically signed. There are two primary ways a judgment can be issued. First, if you fail to respond to a lawsuit that has been filed against you, the court will likely issue a "default judgment" against you. Second, if you respond to the lawsuit, but the judge thinks you owe the money based on the evidence, he can issue a judgment against you.

Before I go into more detail, if you want a free debt consultation to help you deal with these debt problems and the attorney collections, you can apply with one of Bill's approved debt help partners.

Once a creditor has obtained a judgment against you, it can request that the court order your employer to withhold a certain portion of your wages to repay the judgment. The amount of your wages that can be withheld varies by state, but no state allows more that 25% of a debtor’s net wages to be garnished to repay a judgment. If you are sued by a creditor, you should retain an attorney in your area to protect your interests.

The threats that you describe in your question are a common technique employed by collectors to intimidate debtors. If the collector contacting you is not a law firm licensed to practice law in your state, the collector may be breaking the law by threatening to garnish your wages. Because collection agencies cannot generally file lawsuits themselves, they cannot threaten to do so. Nor is a collector in a position to analyze the law regarding wage garnishment in your state. The Federal Trade Commission offers a wealth of information regarding the federal laws regarding debt collection practices.

If you feel that a collector has broken the law, you can file a complaint with the FTC or your state Attorney General’s office, or file a lawsuit against the collector for violation of the Fair Debt Collections Practices Act, the primary federal law regulating debt collectors.

The Fair Debt Collections Practices Act also requires collectors to stop calling you if you notify them in writing to cease communication. While a request to cease communication will not make the debt go away, it can end harassing credit calls. Be warned that sending a cease communication request can sometime lead to creditors filing a lawsuit since they are no longer able to conduct traditional collection activities. You must weigh the stress being caused by the calls you are receiving against any risk that sending a cease communication request may cause.

I hope the information provided helps you Find. Learn. Save

Best,

Bill

www.bills.com/

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5 Comments

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  • BA
    Nov, 2009
    Bill
    Without a steady income, I do not see a lender underwriting a loan for you in your present circumstances. Readers, your thoughts?
    0 Votes

  • 35x35
    Nov, 2009
    isa
    I only have per diem job and i can't pay anymore my loan. Is it possible for me to get a low interest soon. i know i will have a ft-job soon. i applied a loan modification from hud but still pending. I stopped paying May'09.
    0 Votes

  • BA
    Sep, 2009
    Bill
    To learn more about voluntary repossession, please see All about voluntary repossession. Regarding your credit score, it's impossible to say with any certainty your credit score will drop X points. It will remain on your credit history for seven years. Each credit history is different, and as a result a devastating event like a repossession will affect each person's score differently. It is fair to say that if your score was high before it won't be following the repo. Keep in mind that by remaining current on your other debt accounts you can rebuild your credit score.
    0 Votes

  • 35x35
    Sep, 2009
    Eric
    I just got a pay cut a few days ago and i have a 36000 truck loan with gmac for about two years now. And i not going to be able to pay for it anymore. So i was thinking about letting it go back like surrending to the finacing company and let them sell it and i pay what left over but i was wondering how bad will it effect my credit score i know it will be a negative on my credit report but just how many points will it go down?
    0 Votes

  • PL
    Aug, 2009
    Peter
    Nice bit of helpful information sharing. Thanks for the great insight for folks behind on their loans.
    0 Votes

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