Does a Judgment Mean You Will Be Garnished?

Wage garnishment is one possible result after long periods of delinquency. Once the court awards your creditor a judgment, garnishment often occurs. Since the process is costly and time consuming to a creditor, it may be open to alternatives. However, if the proceedings have progressed to this stage, garnishment may be inevitable.

Judgment

Your creditor begins to assess late charges once you are 10 to 15 days late on your payment. After 30 days, the creditor reports the delinquency to the credit bureaus. After 90 to 120 days, the debt is charged off or sold to a collection agency. After continued non-payment, the creditor seeks judgment against you. If the court sides with the creditor, you must repay the judgment or face wage garnishment. The judgment stays on your record until you repay the obligation.

Garnishment

There are two types of garnishment -- wage and attachment. In a wage garnishment situation, the creditor makes arrangements with your employer to deliver part of your salary to pay your debt. In an attachment scenario, the creditor seizes funds from your bank account to repay the debt. Wage garnishment is more common in individual delinquency cases. Under Title III of the Consumer Credit Protection Act, the garnishment encompasses the lesser of 25 percent of disposable earnings or the amount by which disposable earnings are more than 30 times the federal minimum wage.

Problems

Wage garnishment is not always an option for creditors. At the time of publication, four U.S. states -- Pennsylvania, North Carolina, South Carolina and Texas -- only permit wage garnishment in tax situations. Creditors in these states look to asset seizure as a method of recouping losses. Even in states that allow garnishment, the process is long and expensive for creditors. The progression encompasses legal fees, a lengthy court process and the retention of bad debt.

Alternatives

Because of the difficulty in carrying out wage garnishment, seek alternatives with your creditors. Start a dialogue before you get to the court process. If that point has passed, contact the debtor and attempt to reach a settlement. If that option does not work, consider filing for bankruptcy. Once you file for bankruptcy, you are granted an automatic stay. An automatic stay prevents your creditors from continuing action against you until the bankruptcy is settled.