Wage Garnishments and Collection Agencies

Collection agencies are companies, typically hired by creditors, that specialize in the collection of unpaid debts. The collection agencies typically have a number of methods designed to compel people who owe money to pay what they owe. One of the most aggressive debt collection tactics is the garnishment of a person's wages. When this occurs, a person has a percentage of his paycheck or other income source siphoned off and paid to the creditor.

Collection Agencies

Collection agencies enjoy the exact same rights as the creditor to whom the debtor owes the money. In some cases, the debt will be outright transferred to the agency, meaning that the agency will in fact be taking the place of the creditor. A collection agency has the same rights to collect on the money, including the same right to sue for a breach of the debt contract.

Lawsuits

In order to attain legal authorization to pursue the most aggressive debt collection tactics, a collection agency must first receive a legal judgment that declares that the individual owes the collection agency money. This can only be attained if the collection agency sues the person in civil court, a judge hears the case, and the judge rules that the debtor does, in fact, owe the collection agency a certain amount of money.

Wage Garnishment

Once a judgment has been received, an agency can generally attempt to seize the money forcefully. Although garnishments are not allowed in all situations -- for example, some low income people are protected from wage garnishment, while some states forbid garnishment for private debts altogether -- collection agencies will often attempt to garnish a debtor's wages. This is done by receiving permission from a judge to present an order of garnishment to the person's employer.

Statute of Limitations

Collection agencies are only allowed to garnish wages after winning a lawsuit against the debtor. A collection agency cannot garnish any sort of income -- even if the debtor previously agreed to the garnishment -- without the authorization of a judge. Garnishment is also impossible if the collection agency is not able to file suit before the statute of limitations has expired. Once the statute has expired, suits cannot be filed, meaning garnishment cannot be authorized.