Can my Wages be Garnished for Credit Card Debt?
Many people who are struggling with credit card debt are familiar with the threats that collection agencies make. While some of them, such as threatening to make you lose your job or your house are impossible, many people are worried when a collection agency threatens to garnish a paycheck. Is it really legal to take a person’s paycheck because they didn’t pay their credit card debt?
While it is possible, it’s important to understand that the process takes time and it is not instantaneous. There are a lot of legal barriers that have to be worked through in order to win a wage garnishment, making this option only cost-effective for people who owe a lot of money. Small amounts (typically $500 or less) are rarely worth the effort.
In order to get a wage garnishment, a collection has to show a court that they legally hold the debt and that they have followed the rules of debt collection. Debt collection laws vary from state to state, and some collection agencies simply do not want the extra scrutiny that demanding wage garnishment will entail. Again, this is why only the largest debts are flagged for this option.
In most states, an effort must be made for at least 6 months to collect the debt. After this, it is possible to petition the courts to order a wage garnishment. The court review process can take anywhere from several weeks to several years, depending on the efficiency of the court. In many jurisdictions, these cases do not take priority. Unfortunately, the collection agency can usually choose where to file their claim, and they tend to pick courts that are easy for them to work with.
After proving to the judge that the debt has not been disputed, an order for wage garnishment can be issued. The collection agency must then determine where the debtor works and serve the paperwork to the company. Once this occurs, up to 15% of a debtor’s paycheck can be withheld and turned over to the collection agency. This will last until the debt is paid off. The court must be kept aware of the status of the debt throughout this process.