Wage Garnishments On The Rise : How To Protect Yourself

gavel As the economy continues to sour and more people fall behind on their bills, more people find themselves being sued by their creditors, or more accurately, by debt collectors. 

Because most people don’t know how to react to being sued and very often do not show up to court, creditors largely win by default. Once a court judgment has been entered, then the creditor may collect by garnishing wages, in most cases, a quarter of take-home pay. Especially in this economy, where every dime counts, having a quarter of your wages disappear into a garnishment can be devastating.

 

You don’t have to let this happen to you: there are remedies.

1: File for Chapter 7 bankruptcy

Once you file for bankruptcy, all collections efforts against you must cease completely, including any lawsuits or collections on court judgments. This is known as the “automatic stay.”  The “automatic stay” is in effect until your hearing date, when the Bankruptcy Trustee will wipe out all of your unsecured debts forever.

2: Seek credit counseling

If you don’t want to file bankruptcy, a credit counseling agency can  help you negotiate with your creditors for lower payments through a reduction in interest rates and the forgiveness of late fees and penalties. You will then make a single payment to the counseling agency, and it will distribute it to your creditors and allow you to repay what you owe quickly, in most cases, within 5 years.

3: Attend the court hearing

If neither of the above solutions work for you, then you MUST attend the court hearing and present your side of the case. Even if your side is only that you have no money to pay the debt, it is a defense, and if you are living at or near the poverty line, this is an even stronger defense.  To prove your case, bring wage stubs and your bills for the past two months. Show the judge that you have no money at all to pay what you owe.

In many cases, especially if the lawsuit has been brought by a collection agency, they will not have the necessary proof that  you owe the debt and more critically, that they have the right to collect.  In these instances, the judge will dismiss the lawsuit. This is actually more common than you think.

Don’t be afraid and don’t be ashamed. Know your rights and fight back.

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