Wage Garnishment for Credit Card Debt

Wage garnishment is a perfectly legal way for a credit card company to collect their debt in most states. It is usually associated with child support, alimony, or unpaid taxes. But, it can also be used against people who have unpaid credit card bills. There are also different garnishment laws that vary from state to state. Wage garnishment is a tool of last resort. It may be the least favorite collection method by the debtor and the creditor. So, work hard to get into negotiations with your creditor before it gets to this point.

Garnishment is a step that creditors do NOT like to take, because it costs them money. Collectors have to sue you and win to be able to garnish wages or property. This can cost much of their profit in court costs and lawyer fees. You can most likely work out a deal and get on a payment plan before this happens. Many times they would rather take a reduced payment, than risk losing much of their profit in a court case. If a creditor or collection agency threatens to sue you, take it seriously. Try and get into negotiations with them to reduce your debt to something you can afford. Garnishment laws vary by states, so you might want to seek the help of a lawyer if you are threatened with a lawsuit.

If a creditor is successful obtaining a wage garnishment against you, then your employer will be contacted. They are obligated to comply with the judgement and send a percentage of your wages to your creditor or collector. They can legally only take up to 25% of disposable income or “the amount by which your disposable income is greater than 30 times the federal minimum hourly wage”. Your employer isn’t legally allowed to fire or take action against you if you are having wages garnished, but it may reflect positively on you at work.

Bankruptcy will immediately stop wage garnishment. If are having severe difficulty dealing with the debt, you might consider bankruptcy as a way to stop it. As soon as you begin the process of bankruptcy, you receive an automatic stay. This is an injunction that stops all efforts by creditors to collect the debt. This brings debt collections to a halt until they can be addressed in a bankruptcy court. Bankruptcy is very serious, but can be appropriate in some situations. You should make sure you understand the ramifications of bankruptcy and how it may affect your future if this is something you decide to do.