How to Negotiate a Deal So That Your Checking Account Is Not Garnished

Although wage garnishment is typically a last resort for a creditor to which you owe a delinquent debt, your creditor can pursue debt recovery through wage garnishment in most states if your account becomes severely delinquent -- usually at least six months past due. Wage garnishment can reduce your take-home pay by as much as 25 percent, and if two or more creditors execute wage garnishments in a single year, you can lose your job in some cases. However, you may avoid wage garnishment by negotiating with your creditor before it files a lawsuit against you to gain the right to garnish your earnings.

Instructions

1

Call your creditor as soon as you determine that you will not be able to make your debt payments on time. Staying in contact with your creditor shows that you are willing to repay your debt, even if you are currently experiencing a financial hardship. This may make the creditor less interested in pursuing garnishment, which is costly and time consuming.

2

Provide your creditor with information about your current financial situation, including your income and other debts. Also, tell your employer if you recently lost a job or experienced a reduction in pay, and let the creditor know how you plan to resolve your financial hardship. The creditor may ask you to provide documentation to support your statements.

3

Ask your creditor about an extended repayment plan or forbearance. If you are behind on your payments, the creditor may allow you to catch up your past-due balance over time. It may also allow you to suspend payments for a specified period of time if it believes your financial hardship is temporary.

4

Propose a reduction in interest charged on your outstanding balance. Although the creditor will realize less profit by reducing your interest rate, this may make your payments more affordable and keep you from defaulting on your debt.

5

Ask the creditor to waive some or all of your late fees and over-limit charges if you are behind on your payments or your balance exceeds your credit limit. The creditor may agree to waive these charges to help you catch up your past-due payments or bring your account balance below your credit limit.

6

Propose a partial settlement of the debt if you have a lump sum available. The creditor may accept a partial payment and consider the debt paid in full, particularly if it believes that you will not be able to catch up your past due balance.