Creditors you neglect to pay can collect the debt over time by forcing your employer to set aside a portion of your wages each pay period. Your employer must then send your garnished wages to the creditor, which will apply the payment to your outstanding balance. Most creditors cannot garnish your paychecks without first obtaining a judge's permission in the form of a civil judgment.
How It Works
In order to pursue a wage garnishment, your creditor must file a lawsuit against you. You have the option to present a defense to the court and fight the judgment in an effort to prevent garnishment from occurring but, if you lose, the judge in the case will sign off on a civil judgment for your creditor. The creditor requests a certified copy of its judgment from the court and uses it to file a wage garnishment request at the county clerk's office. Without a certified copy of the judgment, the creditor lacks the right to apply for a garnishment order and seize your wages.
Proof of Debt
Requiring creditors to provide proof of a court judgment when filing a garnishment order ensures that con artists and unethical creditors cannot simply seize your assets without warning. A court hearing provides you with the opportunity to contest your liability or the amount the creditor claims you owe. The judgment serves as proof that a judge heard the case and ruled that the debt in question was legitimate.
Federal Debts
All commercial creditors, such as banks, hospitals, landlords and credit card companies, must file a lawsuit and obtain a judgment before garnishing your paycheck. The federal government, however, does not bear the burden of proof and does not need to demonstrate to a judge that the debt you owe is legitimate. Thus, if you owe unpaid federal student loans, back taxes or any other federal debt, the government can and will garnish your paychecks without first filing suit against you for the debt.
Wage Garnishment Restrictions
Federal law restricts garnishment amounts and, in most cases, a commercial creditor can seize no more than 25 percent of your earnings each pay period. The states have the right to adhere to federal garnishment regulations or set restrictions of their own. Because of this, some states, such as North Carolina and South Carolina, bar wage garnishment entirely -- but only for commercial creditors. The federal government has the right to garnish your wages regardless of your state's garnishment restrictions.
Warning
Garnishing consumer wages without first filing a lawsuit against the debtor is not the only collection right the government has when forcing you to pay off your debts. Federal creditors can also seize your home, bank accounts and cars. If the Internal Revenue Service owes you a tax refund at the end of the year, the government will withhold the refund in its entirety each year until it collects the full outstanding balance you owe.
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