It is much easier to PREVENT a WAGE GARNISHMENT than to STOP A WAGE GARNISHMENT! If it's already hard to pay bills with your take home pay, what would you do if that was cut by 25% more!
Here are some VERY IMPORTANT things you must know in advance.
I've been helping people deal with debt issues for almost 15 years now.
I've taken hundreds of calls from stressed-out, scared, "OMG, what am I going to do now?" people who had had their payroll check garnished!
The title of this blog is Preventing Wage Garnishment in Oregon, but it applies to all states.
OK, so how do you PREVENT a Wage Garnishment?
If you have just started to fall behind or have fallen behind on making the required payments on your credit cards or other unsecured debts, here is what normally happens BEFORE a wage garnishment begins:
- First, you get calls & letters from your original creditor
- Then, you get Calls & letters from a debt collector
- You may be issued a Summons
- You may get a Judgment awarded against you
- Finally, you may be Garnished
Let's walk through what you MUST DO in order to PREVENT A WAGE GARISHMENT:
Calls & letters from your original creditor(s)
When you are behind in making your monthly payments due to your creditors, those creditors will try to help you get caught up and/or get a fresh start on repaying your debt.
Let's face, the creditors want to get repaid plus interest and fees, so at first (maybe the first 3 months or so you are behind), they will call and send letters.
Unfortunately, as long as your account is with the original creditor, they have the right to call you EVEN if you write a letter to stop calling.
Now, once they charge off or assign your account to another agency...debt collector, you can put a stop to those calls. I'll show you how in just a minute.
I understand how stressful and possibly embarrassing it is to get calls like that, so at this point, rather than ignore them, try saying something like this:
"Yes I know that I am behind, and I fully intend to get caught up just as soon as possible. But, please stop calling me."
Sometimes this works and the original creditor will reduce or even eliminate the calls.
But, don't expect that to happen every time.
Sometimes they can be very rude! In that case, don't waste your time trying to explain or arguie, just hang up!
As to the letters....
You may get a letter offering you:
- Reduced payments for 6 months or so to allow you to get caught up...or,
- A settlement offer to reduce the balance you owe, if you can that amount in a lump sum or just a few months.
While I am not in favor of the first offer which is called a "Hardship Plan", sometimes the SETTLEMENT OFFER is not bad...if you have the funds to take advantage of it!
If the original creditor cannot get you into some kind of repayment plan or "back on track" in 3-4 months, they most likely will charge off, transfer or sell you account to a debt collector.
Calls & letters from a debt collector
ISo, the calls and letters start again! Lots of calls and letters!
But now, you can put a stop to those calls. Here's how:
But again, just because the calls stop, the letters continue, so you are not "out of the woods" yet!
Depending on the type of debt collector your account has landed with, you may be able to get a settlement, whether in a lump sum payment or possibly a settlement paid out over several months.
Here are some actual debt settlements we have completed for our clients:
If your still not able to make REASONABLE payment toward a settlement, then the debt collector may decide to FILE A CLAIM and then you would get a SUMMONS.
Summons
If you have ever had a summons delivered to you at home or even at work, it is a very stressful and humiliating experience!
Although most of the time the summons is delivered, in person, by a person contracted by the debt collector, sometimes a summons may be delivered by a sheriff officer!
BUT....DON'T....FREAK....OUT!
- You are not going to jail!
- They are not going to take your TV or other "stuff".
- In about 99.9% of the time, you are never going to court.
So again....
DON'T....FREAK....OUT!
The SUMMONS will state who the PLAINTIFF is (that's the creditor or debt collector) and name you as the DEFENDANT.
It will also state what the amount of the claim is (how much you owe now, including interest, fees, etc.)
Then it will state something to the effect that you have"20 (or 30) days to give an ANSWER to the court at (address, etc.).
DOES THIS MEAN YOU HAVE TO GO TO COURT?
NO! NO! NO!
It means that if you KNOW FOR CERTAIN and HAVE PROOF that you do not owe this CLAIM, then you can file an ANSWER to the court in the allotted time (usually 20-30 days from receipt of the summons).
The ANSWER must be in the correct, legal document form and so you most likely will need an attorney to prepare it. And, in addition to attorney fees, their is a hefty fee to file the ANSWER with the court!
So again, don't start down that road unless you know you can prove that the claim has no merit!
CAN A CREDITOR OR COLLECTOR GARNISH YOUR WAGES OR BANK ACCOUNT AT THIS POINT???
NO!
It is a misunderstanding that just because you are behind on your payments a creditor or collector can get a wage garnishment. NOT TRUE!!!
Before that can happen, a JUDGMENT must be awarded by the court.
I'll explain more in just a minute...
OK, YOU GOT THE SUMMONS, YOU OWE THE DEBT....NOW WHAT?
This could be the most important point for you to take from this article...
DO NOT IGNORE THE SUMMONS !
I can't tell you the number of times a prospective client or even one of our current client calls and says that they have been garnished and admitted that they had received the summons, but just ignored it!
REALLY???? WHAT WERE THEY THINKING???
If a creditor or debt collector goes to the EXPENSE and TROUBLE OF FILING THE CLAIM and PAYING FOR IT TO BE DELIVERED, DON'T YOU THINK THEY ARE SERIOUS?
On the other hand....
In most cases, we have helped our clients AVOID GARNISHMENT by either negotiating a:
- SETTLEMENT, LUMP SUM OR TERM PAYMENTS on a reduced balance, or
- STIPULATED AGREEMENT
So, just because you have received a summons does not mean it's too late, but, we need to move fast to prevent a...
Judgment
Most of the time, a person who is in such a severe financial situation that they cannot keep up with their debts and these debts have gone to a debt collector and a settlement or repayment plan could not be arranged, a DEFAULT JUDGMENT will be granted by the court to the plaintiff (creditor or debt collector).
Now, once the JUDGMENT has been awarded, NOW, AND ONLY NOW, they (the plaintiff) can apply for a WRIT OF GARNISHMENT.
Most states allow for up to 25% of the "take home/after tax check" to be garnished (deducted) !!!!
There are EXEMPTIONS FROM WAGE GARNISHMENT.
Some include:
In Oregon, income under $218 after tax/take home income. In other words, if you bring home less than $915 per month, you cannot be garnished.
Other sources of income that are exempt from garnishment:
- Social Security
- Retirement
- Supplemental Security Income (SSI)
- Public assistance (welfare)
- Unemployment benefits
- Disability Income (other than SSI)
- Workers compensation
- Spousal and Child support
WARNING!!! If you have a judgment against you and receive income from one or more of the sources above, you should make sure your bank understands that any garnishment request should be denied!
If you don't and the bank doesn't do it's "due fiduciary diligence" and transfers your funds, you can get them back, but it may take some time!
OK, if you were barely paying the bills before, and 25% is deducted from your check, what are you going to do now?
BANKRUPTCY
When I refer to "bankruptcy", I like to call it "BANKRUPTCY PROTECTION".
The bankruptcy laws in our country and your state, are there to PROTECT you from losing everything you have when a dire, financial crisis hits you!
Yes, I think a person should do everything possible to AVOID bankruptcy, but when all else fails, the you need to seek the help of a qualified bankruptcy attorney.
The bankruptcy attorney can not only advise you on what type of bankruptcy plan you qualify for, but they will put a stop to all calls and collection efforts by your creditors.
FINALLY . . .
If, or when, you face a financial hardship and you just can't keep up with the payments, you have options!
Do not...I repeat...DO NOT "hide your head in the sand"!
