Often times when a debt goes unpaid the original creditor will hire a collection agency to file suit against you. If successful, this suit will result in a judgment and then, likely garnishment. Garnishment is a means of involuntarily collecting money owed on a debt after obtaining a judgment against the debtor. The most common type of garnishment is wage garnishment, where the collector deducts money from your salary by court order. A wage garnishment will cause 25% of your paycheck to be deducted unless state law creates exemptions allowing less to be taken. It usually continues as long as the consumer is employed and the debt is unpaid. The second most common is a seizing of assets in a checking or savings account.
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Garnishments often occur when a debtor least expects it and often times when the debtor received no notice until the money has already been taken. While a garnishment cannot usually be stopped, if the collector has not followed the letter of the law, there may be relief.
The first step to take in determining whether a garnishment is proper is to make sure the collector filed suit and properly obtained a judgment against you. Often times, consumers state they had no idea a lawsuit was ever filed. A common occurrence in the area of collections is where a collector files a lawsuit, but fails to properly serve the debtor so he is unable to represent himself in court. When a lawsuit is filed, the Plaintiff must serve the lawsuit and a summons upon the debtor. Often times, the summons is served at a wrong address. Then the collector will appear in court and obtain a default judgment against you for your failure to appear. Make sure you have a real judgment against you by contacting the local courthouse and then make sure you were properly served. You are entitled to review the entire court file as it is a matter of public record.
If the debt does not belong to you, a court of law is your opportunity to explain yourself. On the contrary, if the debt is yours, court is a great place to open the dialogue for negotiation. You can discuss a payment plan or lump sum payment as a settlement in lieu of garnishment where they take a specified amount of your paycheck. If you were not served and had no notice of the lawsuit prior to the garnishment, you must file a motion to vacate the judgment for failure to properly serve you with notice of the lawsuit.
In the event the garnishment is valid, the collector is not entitled to your entire paycheck. The amount allowed to be taken is determined by your state and there are certain exemptions including the receipt of public assistance. If you qualify for an exemption, you must put the collector on notice by completing a formal exemption notice and filing it with the court. If you are not fully exempt, do not forget there are still limits to what can be taken from your paycheck. Check your state law to determine the permissible amount of money a collector may withdraw.
Filing for bankruptcy is another way to stop a garnishment. Filing for either Chapter 7 or 13 bankruptcy will effectively cease any wage garnishment and force the collector to refund any money that was garnished within 90 days preceding the filing. To make sure filing bankruptcy is the right option for you, make sure to consult a bankruptcy attorney.
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