If you do not make your credit card payments when due, your creditor will typically attempt to contact you by mail or telephone to try to compel you to pay your past-due amount. After your account becomes 180 days or more delinquent, the credit card company may charge off your balance, which means that it declares the balance a business loss. A charge-off does not mean that the creditor forgives the debt. It may continue to pursue collection activities, which may include garnishment.
Obtaining a Judgment
A credit card company must obtain a legal judgment against you for a charge-off before it can garnish your earnings or bank account balances. A judgment is a verification that you are legally obligated to repay a debt. A creditor obtains a judgment by filing a lawsuit, usually in a county court, and providing evidence of your debt. After giving you an opportunity to respond, the court awards the judgment to the creditor and records the judgment as a public record entry.
Execution of Garnishment
After obtaining a judgment for your charged-off credit card debt, the creditor may apply to the court that issued the judgment for a writ of garnishment. This allows the creditor to contact your employer to demand a portion of your future earnings. The creditor can also obtain a writ of garnishment to force your bank to turn over nonexempt funds to the court for payment of your credit card debt.
Wage Garnishment Limitations
A creditor seeking wage garnishment for payment of a charged-off credit card balance must follow limitations imposed by federal and state law. Federal law limits garnishment to 25 percent of your post-tax income, or earnings above 30 times the federal minimum wage, whichever is less. Some states place additional restrictions on wage garnishment. For example, Texas and Pennsylvania prohibit private creditors from garnishing wages.
Bank Garnishment Limitations
Bank garnishments for charged off credit card debt are also subject to state-imposed restrictions. A credit card company cannot garnish deposits derived from disability, Social Security or unemployment income. Some states also exempt certain amounts in your bank account. For example, Ohio law prohibits a judgment creditor from taking the first $400 in your bank account.
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