If you cannot make the payments on your vehicle, you may opt for a voluntary vehicle repossession -- relinquishing ownership of your vehicle to your creditor instead of waiting for it to be repossessed. The lender then sells your vehicle, typically at an auction. You are responsible for the difference between the balance of your loan and the sale price. In Louisiana, a creditor may garnish your wages to collect a deficiency.
Validation of Debt
Before a creditor can garnish your wages to collect a deficiency, it must file suit against you, usually in the parish where you reside. The creditor will typically use other collection strategies, such as letters and phone calls, before resorting to a civil lawsuit. However, if the creditor can demonstrate to the court that you owe the deficiency, and that it has made reasonable attempts to collect the deficiency, the court may award the lender a judgment against you. A judgment is a legal validation of the debt you owe the creditor.
Writ of Garnishment
After winning a judgment from a Louisiana court for the deficiency, the court may apply for a writ of garnishment from the court. A writ of garnishment is an authorization from the court that allows the creditor to contact your employer and demand that a portion of your wages be held back for the repayment of a judgment debt. Once the creditor receives a writ of garnishment, it may order your employer to garnish your wages. The garnishment is effective immediately upon notice to the employer.
Time Limit
Typically, the creditor can continue garnishing your wages to collect a deficiency on a voluntary repossession until the balance, which includes vehicle storage and sale fees, interest, attorney fees and court costs, is fully repaid. Judgments for written contracts are valid for 10 years in Louisiana. This means that your creditor has a decade from the date of judgment to collect from you through garnishment and other tactics. However, if the creditor cannot fully collect within the 10-year period, it may apply to the court to renew the judgment, which gives the creditor an additional 10 years to collect.
Garnishment Limitations and Exemptions
A judgment creditor cannot legally take all of your wages. Louisiana law limits garnishment to 25 percent of your disposable income, which is your pay after tax deductions. Wages less than 30 times the federal minimum wage per week are exempt. Other types of income, such as Social Security benefits, disability payments, retirement and worker's compensation payments are also partially or completely exempt from garnishment.
0 comments:
Post a Comment