What to Do When You Receive Judgment Papers From a Creditor?

When you stop making payments to a creditor, it has the right to sue you in an effort to collect your outstanding balance. If the creditor is an agency of the federal or state government, such as the U.S. Department of Education, IRS or a state treasury department, these agencies do not have to file a suit against you before they can begin garnishing your wages, state income tax refund and federal income tax refund.

Lawsuit

When you receive the lawsuit paperwork notifying you of a creditor's lawsuit, you may still have some options to avoid court and possible wage garnishment. You can contact the creditor or law firm listed on the lawsuit paper work and try to negotiate a settlement agreement. Often times, creditors will allow you to settle your account for less than the full balance, but they may demand that you pay the settlement amount in full. You can also try to negotiate a monthly payment arrangement. Negotiating and accepting settlements and payment arrangements is at the creditor's discretion. They have no legal obligation to work out any sort of arrangement with you.

The Judgment

When you receive a judgment for a debt, it is from the court and not the creditors. The papers will list the name of the creditor, the amount of debt you owe and the judge's final decision. A final judgment in favor of the creditor means the judge is allowing them to begin garnishing your wages as a means of collecting on the balance you owe. Generally, the only thing you can do to stop the garnishment at this point is to pay off your outstanding balance in full.

Filing a Motion to Quash

After you receive a judgment, you have the right to file a Motion to Quash a Writ of Garnishment. By doing so, you are asking the judge to dismiss the case and void the creditor's writ of garnishment. You should consider filing a motion to quash if the creditor did not properly serve you with the lawsuit papers. Courts refer to this as lack of jurisdiction. You may also file a motion to quash if you can prove that the debt does not belong to you, such as in the case of identity theft. However, if you are a victim of identity theft, you need to file a police report if you haven't already. A judge may ask you to present a copy of the police report in court.

Filing a Claim of Exemption

Income that is exempt from private creditor garnishment includes regular Social Security payments, worker's compensation benefits, disability payments and unemployment benefits. The above-listed type of income is not exempt from state and federal agency debt. If you make income that is less than 30 times the federal minimum wage, it is exempt from garnishment for state debts, federal debts and private creditors. To calculate 30 times the federal minimum wage, multiply the current minimum wage by 30.

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How to Correct Negative Remarks on a Credit Report

Your credit report plays a large role in your financial life and if you have negative statements on it, it can end up costing you a lot of money. Instead of simply leaving these negative remarks on your credit report, you may be able to take action and remove them. By communicating with your creditors and with the credit bureaus, you could potentially get the remarks removed and start to improve your credit score.

Instructions

1

Get a copy of your credit report so that you can see the negative remarks. If you plan on removing these remarks, you need to see exactly is included in the report. You can find out exactly which creditors left negative remarks and what they said. You can get a free copy of your credit report from the credit bureaus or buy one from FICO.

2

Contact your creditor to ask them to remove the negative statement from your credit report. You can start by calling your creditor on the phone and talking to them about the issue. If they are unwilling to remove the negative statement after talking, you can send a letter. Write a letter to the creditor and politely ask them to remove the statement. You should also include any proof of payment if you believe that the statement was left in error.

3

Contact the credit bureaus immediately after contacting your creditors. You can write letters to the credit bureaus that have the same information as the one that you sent to your creditors. Include the same proof of payment that shows when you paid off your accounts. If the company is incorrectly reporting that you had late payments on your account, you should be able to prove when you paid your bills with documentation.

4

Use a rapid rescoring service to help you with the process. If you are in the process of applying for a mortgage or some other type of loan, you can hire a rapid rescoring service to help improve your credit file. They have relationships with credit bureaus and they can often get negative remarks removed from your credit file within two or three days.

5

Investigate any credit repair services before hiring them to do work for you. When you work with this type of company, do not pay them for the services until they have done what they claimed they would do. Many of these companies are scams and they do not do what they claim, so you have to be careful in this industry.

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How to Reverse the Charges on My Visa

One of the benefits of making purchases with a Visa card, is that you can reverse a charge if the product you ordered never arrived -- if it arrives damaged -- or if a false charge is made. If a merchant will not reverse your charge, Visa will handle it for you, and thoroughly investigate your official dispute.

Instructions

1

Return to the merchant and ask to reverse the charge to your Visa. If the merchant won't work with you to reverse the charge, move on to Step 2.

2

Contact Visa. You will need to provide the customer service representative with the date, amount of the charge, the name of the merchant, and a reason why you want to dispute the charge. Visa will then contact the bank of the merchant, and ask for a chargeback.

3

Write a letter to Visa explaining the situation with the above information, if Visa requires you to do so. This happens in some cases. Visa may also require your signature to pursue the chargeback, especially if the merchant has breached the law in any way.

4

Contact the authorities and report the charge if the merchant charged your Visa card illegally. Visa will require you to do this, if you have not already.

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Is Debt Consolidation Good?

Debt consolidation businesses are booming as many people struggle under the weight of big debt. Choosing to consolidate your debt can seem like an easy solution if you can save monthly expenses. But is debt consolidation a good thing? For some, yes. For many, it may not be the answer you need to save money on your bills. Learn how debt consolidation works so you can decide if it's good for you.

Function

The function of debt consolidation for credit card debt, according to many who offer the service, is to bring your monthly debt payments down by combining all of your bills into one. The payments are made to the consolidation service and not any of the original creditors. The service would charge you a fee that can either be a flat rate or a percentage of the original balance per creditor. In exchange, the consolidation service negotiates a lower percentage rate for each creditor. If the consolidation is a loan, the consolidation service can offer to settle the accounts for a lower amount. To consolidate mortgage debt, debt consolidation companies would assume the mortgage at a lower interest rate with the home serving as collateral.

Time Frame

It can take less than three days for debt consolidators to negotiate new terms with each creditor, should the creditors accept the program. Consumers would most likely have to authorize the consolidation service to draft the payments straight from their checking accounts. Once the terms are agreed upon, consolidation loans can take anywhere from a few months to several years for a payoff.

Benefits

One major benefit if debt consolidation is that you can pay off several high-interest credit cards at a significantly lower interest rate. Lower interest rates means less time it should take to pay off the accounts. Also, debt consolidation allows you to pay just one bill instead of several creditors that require payments at various times of the month. With debt consolidation, you pay once a month to one service. For home equity consolidation loans, there is a possibility of a tax deduction because of what you pay in mortgage interest rates.

Considerations

Debt consolidators often do not work for free. Many ask for long-term payoffs that, at first, seem reasonably lower but cost you more in the end. For example, let's say your debt is $10,000 at an average of 20 percent APR that would take 5 years to pay off at $200 per month. If the consolidation loan gets your payments down to $100 a month, you would still be paying for the same debt for 10 years, plus whatever fees the consolidation company charges. If you never reach a point where you can put some of that saved money towards the debt, you stay in debt longer. Your creditors do not always list your accounts as paid in full by the consumer. They can be listed as debt management, charge-offs, closed by creditor...you name it. Even if you've never missed a payment, having these labels attached to your credit report may turn off future lenders.

Prevention/Solution

One solution is to transfer balances of credit cards into a lower-interest card. You may still end up paying the same amount each month on your credit card bills, but you still have the benefit of making one payment. You will also pay off the total debt faster since the interest rate is lower. Another way to avoid debt consolidation for credit cards is to refinance other loans you have, such as automobile loans. If you can shave off 3 percent of your loan's percentage rate, take the savings and pay on your credit card. You may end up extending the loan of your vehicle, but at least you have something to show for it on a 7 percent APR vehicle versus a 19 percent credit card.

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Garnishment Laws in Missouri

In Missouri, so long as creditors follow Missouri law and obtain a court order for garnishment, they can legally intercept portions of a debtor's wages. This debt collection method is called wage garnishment. The three most common reasons for wage garnishment are creditors collecting on an unpaid debt, federal and state government collecting back taxes and custodial parents going after unpaid child support. Different rules apply to each scenario in Missouri.

Creditors

Creditors (like credit card companies) may garnish debtors' wages if they follow the proper procedure under Missouri law. First, a creditor must obtain a judgment against a debtor. That means the creditor has to sue the debtor and win a money judgment. Oftentimes a debtor may concede the suit knowing that the debt is unpaid, or simply not defend the case. If the debtor does not defend the case, the court may enter a default judgment against her. Once the creditor obtains a judgment, it may seek to garnish the debtor's wages. Missouri law places limitations, however, on the amount of wages a typical creditor can garnish. In Missouri, a creditor may only garnish 10 percent of wages for a head of household and 25 percent for a single person.

Taxes

In Missouri, taxing entities can garnish wages. The Internal Revenue Service may garnish wages to collect federal taxes. The Missouri Department of Revenue may garnish wages to collect delinquent state taxes. For delinquent taxes, the limitations normal creditors must observe do not exist. There is no limit to the percentage of wages a taxing authority may garnish. In addition, a state or federal taxing authority does not have to obtain a court order to effect a garnishment. These agencies can garnish through an administrative process.

Child Support

Custodial parents may seek to garnish the wages of a noncustodial parent who has failed to meet child support obligations. Limitations exist to the amount of wages a custodial parent may garnish a noncustodial parent's wages. However, these limitations are greater than the limitations for ordinary creditors. A noncustodial parent may have either 50 or 60 percent of his wages garnished. The amount garnishable is 50 percent for noncustodial parents who take care of a separate child or spouse and 60 percent for those who do not. In addition, a custodial parent may garnish another 5 percent for payments that are more than 12 weeks delinquent.

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Tips on Financial Depression

Adults often get depressed over financial troubles --- whether it's job loss, stock market fluctuation, identity theft or other hardships. News reports feature stories about adults so severely in financial despair that they harm themselves or their family. It may seem like there is no way out, but all situations can be overcome. If depression begins to affect your daily life, it's time to take action to see brighter days ahead.

Get Help

Depression can linger on for several weeks or months. Dr. Bill Knaus of REBT Network says deep depression is often accompanied by anxiety and anger over seeing no way out. If your persona has changed and your thoughts are filled with negativity, it is time to seek professional help, especially if contemplating suicide. Call a crisis hotline or see a psychiatrist or other counselor.

Stay Positive

Negativity only brings you deeper into depression. Surround yourself with positive friends and family as a strong support system. Be thankful for what you do have and commit to changing your life. What's done is done, so sulking and dwelling upon poor decisions from the past is not productive.

Face the Issue

Do not ignore your financial crisis. Be realistic. Assess your situation and find ways to improve. Your problems won't be solved overnight. It takes dedication and patience, but give yourself credit as you take the steps necessary to alleviate financial strife.

Realize You're Not Alone

When times get tough, it helps knowing you're not the only one suffering. There are probably people around the world in worse situations. Each year, nearly 57 million struggle at some point with depression, reports Dr. Knaus.

Join a Support Group

Meet with others who are also going through or have dealt with financial difficulties. It is comforting to discuss similarities and share emotions with those who know exactly what you are feeling.

Slowly Relieve Debt

Look for ways to save money. Go out to eat less, eliminate impulse buying and cut unnecessary expenses. Use cash instead of credit cards. Those who pay in cash spend an average of 12 to 18 percent less than credit card payers, according to the Maryland State Bar Association. Ask creditors to lower your interest rates, and don't be afraid to seek counsel from a financial planner, debt consolidation company or bankruptcy attorney. The sooner you get back to work, the better. Seek a new job or take on a second one to earn more money. It may take some time, but stay hopeful and don't give up. Take things one day at a time.

Maintain Your Health

Exercise, remain active and get adequate sleep. Dr. Knaus cites Duke University studies that reveal exercise is just as effective in lowering depression as antidepressants. The doctor also recommends eating more fish and other foods high in omega-3 fats to lower some types of depression.

Remain Social

Relax and do things you enjoy to briefly take your mind off of finances. There are plenty of activities that don't require money. Whatever you do, avoid turning to alcohol. It will only make your financial and emotional situation worse.

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What Happens When You Settle Credit Card Debit?

When your credit card debt is out of hand, you don't have to change your telephone number or hide from the credit card company. You can try to settle the overdue balance and free yourself from credit card debt.

Facts

You can settle credit card debt with either the original credit card company, or if the debt is more than six months old, the collection agency that bought the debt.

Features

The credit card company will update your credit report to reflect the settlement. This notation can remain for seven years and reflects poorly on your debt management.

Effects

The credit card company will write off the unpaid balance you owe as a tax loss. You must then include the written-off debt as income and pay taxes on it.

Considerations

If you settle debt with a collection agency, rather than credit card company, you can request that the company delete its negative collection account from your credit report before you make a payment.

Significance

Although settling credit card debt can bring debt relief, evidence of the settlement on your credit report will make it tougher to get approved for new credit cards with reasonable interest rates.

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