Credit Card FAQ

Can Credit Card Companies Garnish My Wages?

15 October 2010 by CreditCardsCo™

In today's times, credit card issuers will do everything to ensure they get their outstanding balance. Even so, getting wages garnished to pay off credit card debt is much harder than it sounds. One of the reasons being that credit card companies can garnish wages only when the state laws allow it. So if one state does not allow wage garnishment as per law, no credit card company can pursue such a course.

The other thing to remember is that wage garnishment is the last step in a long series of steps when it comes to delinquent accounts. The first step is to acknowledge that one cannot pay the credit card company the amount owed and must take action to address the issue. No company wants to garnish wages unless it is absolutely forced to do so.

The First Step Towards Wage Garnishment

Let us examine what happens when a cardholder can no longer pay the credit card companies. One of the first things that should be done in such a case is to approach the creditor. By doing so, the creditor knows the debtor is willing to pay the debt but cannot do so. The creditor then is willing to negotiate — by reducing the outstanding balance, reducing the minimum payment due every month or both. But when an account goes delinquent, the creditor is left with very little choice. The creditor then has the option to seek legal compensation or to sell of the debt to a collections agency. Either way, the creditor is one step closer to getting wages garnished to fulfill the credit card debt.

When The Collection Agencies Get Involved

Credit card companies have many accounts that become delinquent over time. This can happen due to job loss, unforeseen emergencies, or bankruptcy. In such cases the credit card company may no longer seek a judgment from the law in the matter. The creditor can sell of the debt to a collections agency who will now seek the repayment from you. When a collection agency fails to get the money that it spent buying your debt, they approach the court and seek a judgment against you. If such a judgment is passed, they can lawfully garnish your wages. Your employer will be notified by the state and the terms of wage garnishment are entered into the payroll system.

What Else?

When wages are garnished, the credit card company receives a part of the money from the cheque towards the debt owed. If the wage garnishment is not adequate to pay for the debt, other assets of the debtor can be scrutinized. For example if the debtor is a home owner, the creditor can (upon receiving a judgment from the court) place a lien on the house for the outstanding debt. In such a case, when the house is sold, the money first goes to the creditor's claim.

Finding Solutions

By far this is the single most important step any debtor can take when making payments on the debt is beyond his or her capacity. In most cases, any creditor is willing to work with a debtor if the debtor sincerely wants to repay the debt. But the longer the debtor keeps putting off paying the debt and escaping all attempts at communication, the bigger the trouble. Wage garnishments, liens on assets like houses and cars, calls from collection agencies are just a few steps the company is legally allowed to take when a debtor ignore all other warnings.

Some other things a debtor can do when it comes to debt problems are seek help from a debt management company. If a debtor approaches such a company, the creditor knows that the debtor is willing and working towards paying off the debt.

Debt settlement is the last resort for those faced with legal action. There are companies who can take on a debt problem and approach the creditors with a debt settlement plan. If this works, the creditors will settle for an amount which is less than the original debt but it will hurt the credit score of the debtor. The advantage is there will be no wage garnishments or liens against any assets owned by the debtor.

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