While secured debts are easier for creditors to satisfy, unsecured creditors still have legal recourses when it comes to collecting on their debts. They can garnish your wages, but not without going through the proper channels first.
Creditor Lawsuit
Before creditors can start garnishing your wages, they must first file a lawsuit against you. This will typically take place several months after you have avoided repaying the debt. When the creditor files a lawsuit, you will receive a summons to appear in court. At the court appearance, you will verify that you did accumulate the debt, unless you can prove that the debt is not yours and there is some sort of mistake.
Judgment
When an unsecured creditor takes you to court, the creditor has to get a judgment against you to pursue a garnishment. As long as there are no extenuating circumstances that would get you out of paying the debt, like a fraudulent use of a credit card, you will have to repay the debt. The court will issue a judgment against you and this gives the creditor the right to seek payment from you.
Setting Up the Garnishment
Once the creditor has a judgment against you, it can get a writ of execution which allows the creditor to enforce the judgment through a wage garnishment. The lender can then talk to your employer directly to set up the garnishment. Once this process is completed, your employer will provide a certain amount of money to the creditor before you receive it in your paycheck. Your employer cannot fire you as a result of having to process a wage garnishment.
Limitations
Each state has specific rules regarding wage garnishment. Every state has a maximum amount of money that can be taken out of your paycheck. For example, the creditor might only be able to take out a maximum of 25 percent of your gross pay. Creditors also cannot garnish Social Security benefits, disability benefits or public assistance benefits.
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