How to Settle a Judgment Without Garnishment

Although both wages and property can be garnished by creditors to settle debts (car repossessions and foreclosures are forms of garnishment) most people think of wages when they hear the term "garnishment." Many types of debt can result in wage garnishment, including credit cards, taxes, student loans and alimony and child support. The most important step in avoiding garnishment is knowing which creditors you owe and the debt amounts. If you're in fear of garnishment, you no doubt already have received letters from creditors alerting--or threatening--you. Don't ignore these notices. Read them carefully to fully understand your situation.

Instructions

1

Read all letters you receive from creditors. Creditors (except the federal and state governments) must file a petition with a court and receive a judgment against you before garnishment can proceed. Virtually all private creditors for such debts as credit cards and car loans will notify you prior to filing with a court for garnishment of wages. They want you to pay your bills, plain and simple. Know which creditors you owe, how much and which debts are close to the garnishment stage.

2

Contact the bank or other lending institution where the debt resides. Do this as soon as you receive a notice. If you're behind on a department store credit card, for example, call the store's financial department and talk to them. Ask about alternative payment plans to avoid garnishment proceedings. Explain your situation, especially if you have extenuating circumstances such as a job loss or medical issues. Most creditors are willing to work out payment arrangements in order to avoid court proceedings and to ensure payment of their money.

3

Call the IRS if you owe federal taxes. Although the IRS doesn't need to first get a court judgment against you as private creditors do, they will attempt to contact you via mail to notify you of your delinquencies. Again, don't ignore these warnings. You may want to hire an attorney before dealing with the IRS, especially if you owe a large amount of money, but do contact them (even if it's only to let them know that you've received their notices and have hired an attorney to address your back taxes).

4

Contact the Department of Education (DOE) if you have a student loan in default. You first should contact the lending institution through which the loan originated. Banks are normally the holders of debt for Perkins, Stafford and other federally guaranteed student loans. Once you default, the lender will turn the loan back to the DOE. The DOE, in turn, provides assistance to people with defaulted student loans. The DOE can garnish up to 15 percent of your wages without obtaining a judgment, but they also offer re-payment options and even loan forgiveness programs.

5

Declare bankruptcy. Most bankruptcies, including Chapters 7 and 13, eliminate most private debt, although some items, such as taxes and child support, will not be exempted. This should be a last resort and will cause you far more serious long-term credit problems than a simple wage garnishment.

6

File a petition to have a garnishment order stayed, set aside or reversed. Although your odds may not be good when it comes to accomplishing a reversal depending on your financial circumstances, it is an option and you should at least explore the possibility. This step can be taken even before a creditor receives a court judgment against you.