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.
Receiving collection calls is unpleasant, whether from the original creditor or from collection agency. Call 800-998-7497 to speak with a Money Coach and discuss what to say and not to say in a phone call with a debt collector, and also what kind of financial plan you need to avoid this happening again.
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.
Georgia's Garnishment rules are found in O.C.G.A. Title 18 Chapter 4 Article 4. In general, Georgia follows the federal rules for the amount of a garnishment, which allows up to 25% of a worker's wages to be garnished. 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.
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 Georgia, levy is allowed under O.C.G.A. § 9-13-50 & O.C.G.A. § 9-13-16. Levy is allowed if the plaintiff possesses a legal instrument known as Fieri Facias, which is a writ commanding the sheriff to seize and sell as much of a debtor's property as is necessary to satisfy a creditor's claim.
Levy is rarely used in Georgia, perhaps due to the state's myriad rules regarding the collection method.
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.
O.C.G.A. § 9-12-81 allows a lien for a money judgment. Under O.C.G.A. § 44-14-361, mechanics and contractors (and similar laborers and professionals) have the right to place a lien on a property. Georgia lien law for contractors is intricate, strictly construed, and offers several defenses for homeowners.
If you reside in another state, see the Bills.com Liens & How to Resolve Them article to learn more.
Georgia Statutes of Limitations
Each state has is own statute of limitations on contracts and judgments. Under O.C.G.A. § 9-3-25, the statute of limitations on an open account (i.e., credit card) is 4 years. However, the Court of Appeals of Georgia held in Hill v. American Express that a credit card contract is a written contract, and not open. This 2008 decision may or may not set precedent on all state courts in Georgia. (Editor's note: Regardless of a person's perspective what statutes of limitations should apply to credit cards, this finding is not a good example of judicial writing. The decision is conclusory, and ignores the plain-language in Georgia statute. For those reasons, this decision is vulnerable to be reversed in the future.)
See also the Bills.com resource Georgia Statute of Limitations for additional discussion of statutes of limitations and credit cards in Georgia.
Under O.C.G.A. § 9-3-24, written contracts have a 6-year statute of limitations. A contract under seal has a 20-year statute of limitations. Foreign judgments are valid for 5 years (§ 9-3-20), and domestic judgments are valid for 7 years (§ 9-12-60). A domestic judgment can be revived up to 3 years after it become dormant (§ 9-12-61).
Georgia ranked #2 of all states for complaints filed with the FTC about debt collectors. Understand your rights and what protections the law gives you, so a debt collector doesn't take advantage of you.
Fair Debt Collection Practices Act (FDCPA)
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.
Georgia Mortgage Foreclosure
See the Bills.com resource Mortgage Foreclosure Georgia to learn more about the options available to Georgia residents, and the relevant Georgia laws.
Georgia Law & Spousal Debt
Generally, a Georgia judgment-creditor is allowed to pursue the assets of the Georgia judgment-debtor only, and not his or her spouse.
However, exceptions apply to this general rule. For example, some forms of jointly held real estate can be attached, as well as joint financial accounts. Also, if a spouse conveys the title of property to a spouse at a price that is lower than the market price, the judgment-creditor may be able to convince a Georgia court the transaction was sham intended to defraud creditors, and should be reversed.
Georgia Industrial Loan Act and Georgia Fair Business Practices Act
The Georgia Industrial Loan Act applies to consumer loans less than $3,000 with a loan length less than 36 months and 15 days. The Industrial Loan Act sets limits on interest, fees, and collections practices for short-term, sub-$3,000 loans. It does not apply to collections on other debts. The federal Fair Debt Collection Practices Act applies to other debts, and Georgia loans larger than $3,000.
See the Georgia Code Ann. § 7-3-1 to 7-3-29 and Ga. Comp. R. & Regs. § 120-1-14-.01 to 120-1-14-.25 to learn more about the Georgia Industrial Loan Act.
The Georgia Fair Business Practices Act (FBPA) mirrors the FDCPA. The FBPA prohibits any unfair or deceptive acts and practices in the conduct of consumer transactions, including debt collections. It creates a cause of action for violations of the act, and to recover actual damages, reasonable attorney's fees and costs, and three times the amount of the actual damages as punishment for an intentional violation. A FDCPA violation is a per se violation of the FBPA (O.C.G.A. § 10-1-390 and 1st Nationwide Collection Agency, Inc. v. Werner, 288 Ga. App. 457, 459, 654 S.E.2d 428, 431 (2007)).
Collection agents do not need to be licensed in Georgia.
Consult with a Georgia attorney experienced in civil litigation to get precise answers to your questions about liens, levies, and garnishment in Georgia.
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