Some debt collectors including some credit card companies will try to bully you into a payment with the threat of garnishing your wages. When this happens to you, it is important that you understand the laws surrounding garnishment, how you can garnish your wages with your credit report, and what you can do to protect your income from creditors .
Legality of garnishment
Can they actually follow through on this threat? Yes, but not until they sue you, win, and have a judge decide to garnish your wages as a payment. It is illegal for debt collectors to threaten you with a lawsuit if they do not intend to do so or if they cannot do so legally. Your credit card is unlikely to actually sue you for garnishment, but it can certainly hurt you in other ways too, including damaging your credit report and involving a debt collection agency.
Do not ignore a lawsuit
If you are served with legal documents about a lawsuit, it is in your best interest to contact a lawyer. Do not ignore the lawsuit as this will only harm you. If you fail to show up in court, the plaintiff (whoever brought the lawsuit) may have entered a default judgment in their favor. That means you automatically owe what amount of creditors sued you and the court decides how to get the money from you, possibly through garnishment.
If you receive a notice from your employer about your wages being garnished but never served with lawsuit papers, you should see a lawyer immediately. Chances are that the creditor / debtor did not follow the correct process and you can get the judgment set aside.
By paying off debts, you can avoid a lawsuit and garnished wages entirely before they become seriously delinquent. You can sue the creditors whether you owe them $ 500 or $ 50,000.
Garnishment and Your Credit Report
If a creditor sues you and wins a decision will be entered on your credit report and will remain there for seven years from the date of filing. As time goes by, this judgment of your numerical credit score will have less and less impact, but will be visible to future creditors for years. This could affect your ability to open other credit cards, get a mortgage, or buy or rent a car.
How to protect your payables for vendors
While creditors, including credit card companies, don’t often file garnishment lawsuits when you have a steady job and seriously delinquent debt, garnishment is a very real possibility. It may be that your state is one of the states that prohibit garnishment. Or your maximum wage garnishment amount could be either so low or your income could be so high that your wages garnished don’t affect your lifestyle. It is also possible that a court could decide that creditors can open your bank account instead of garnishing your wages that absolutely affect your lifestyle.
Instead of risking garnishment or bank levy, you should reach out to your credit card company and try to work with them to pay off your debt. If your account is seriously delinquent, it may be too late to fix your credit report, but you can save the situation in terms of how much you owe. Often credit cards will settle for a fraction of the debt, usually in a bulk payment, although you may be able to negotiate a payment schedule.