Debt burdens many of us. Sometimes it becomes so onerous that we feel like we don't have any options left. This feeling of hopelessness can cause excess fear and frustration. This clouds our judgment and sometimes causes us to make a bad situation worse and we throw up our hands and make the decision to walk away from our debts.
Debt is Sold to a Collection Agency
When we stop paying our debts, several things can happen. In the case of unsecured debt (debt without collateral backing), after collection attempts have been made by the original debt holder, they have the option of selling that debt to a third-party collection agency. It is important to note that when this happens the collection agency is now the legal owner of the debt and has full legal rights to collect on it provided they do not violate the Fair Debt Collection Practices Act (FDCPA).
Collection Attempts
Once a collection agency has taken ownership of the debt, they will begin attempts to collect on it. While they can contact you, they must abide by FDCPA regulations. They cannot contact you by phone before 8 a.m. and after 9 p.m. and they cannot contact you at your place of employment unless you give them permission to do so. They also cannot discuss your debts with anyone except you, your spouse or your attorney.
Lawsuit
If the collection agency has decided you are not willing to pay them, they have the right to file a lawsuit. When this happens, you will receive a letter from an attorney, and if you do not make contact with the attorney then you will receive a summons to appear in court. If you appear in court then you have the right to explain your financial situation to the judge and you can work out a repayment schedule. If you do not appear then you lose the lawsuit by default and the collection company, at this point, has the right to garnish your wages.
Garnished Wages
According the Department of Labor, "Wage garnishment occurs when an employer is required to withhold the earnings of an individual for the payment of a debt in accordance with a court order or other legal or equitable procedure." Money is automatically taken from your paycheck and used to pay on the debt you owe. The amount of money that can be taken from your paycheck is "in any workweek or pay period to the lesser of 25 percent of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage prescribed by Section 6(a) (1) of the Fair Labor Standards Act of 1938."
Know Your Rights
Debt collectors have many legal avenues with which to collect the money owed to them. Making the decision to walk away from your debts is never an effective solution. Making contact with your creditors and knowing your rights under the FDCPA is a much wiser course of action than simply trying to ignore your debt issues.
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