When creditors or debt collectors file a lawsuit to collect a debt, the court can issue a judgment for you to pay them. The company can then take steps to enforce the judgment against you.
One of debt collectors’ most potent tools is to garnish your income. Garnishment means they can get a portion of your income until you pay the debt or after a judgment is in effect. Debt collectors have several things that they can do to your money once they have already taken you to court. The best way to stop an income garnishment is to keep it from happening in the first place. If you need to fight the debt collectors, you must do it before they get the judgment against you.
Always show up if you learn that debt collectors are suing you. If they do not have the necessary documentation for your debt, the court may not give them a judgment in the first place. The problems for you begin when debt collectors get a judgment against you because they will do everything possible to get their money. Debt collectors can have a long reach, especially if the court system sanctions their actions.
If you believe debt collectors are violating the law, you can take legal action against them. An experienced California FDCPA attorney can file a lawsuit on your behalf to get both justice and financial compensation. You must be extremely careful when working with debt collectors because a lack of attention or mistakes can put you in a challenging position.
What Debt Collectors Do After a Judgment
Debt collectors will begin by sending you a letter stating that you owe them money, which must include specific information about the debt. They may also try to call you (sometimes repeatedly) to persuade you to pay. In their book, it is a big win if you pay without them having to sue you. Debt collectors have likely purchased your debt for pennies on the dollar, and they will make many multiples of that if you pay.
The debt collectors will obtain a judgment against you if you do not pay the debt and will register it with the state. They may then have the right to conduct discovery to learn about the assets you own and how you get your money and can use many means at their disposal to collect your debts. Debt collectors can seize your bank accounts and other personal property to take what you owe.
Debt Collectors Regularly Try to Garnish Your Income
One significant way debt collectors operate is to garnish your income, which is legal under the law. Of course, they are subject to certain limits when they garnish your paycheck. They cannot take more than a certain amount from each paycheck, leaving you with enough money to pay your bills.
Stopping income garnishment can be tricky, but there are steps you can take to end it. Most importantly, you must show up to fight the debt collectors when they claim you owe them money.
They may not even have the proper documentation that evidences the debt they say you owe, but are counting on the fact that you will ignore both their letter and the court papers; then, the debt collectors will get a default judgment against you.
Show Up to Fight When the Debt Collector Tries to Get a Judgment Against You
Debt collectors make a lot of money when they buy large chunks of debt, and their employees certify the validity. Here, there is plenty of room for mistakes. If you show up and fight, you can keep the debt collector from proving to the court that you owe them money.
You are entitled to due process in every court case. You have your day in court and the right to defend yourself, and if you waive this right, only the debt collectors will have their say. With nobody else to listen to, the judge must grant them the order they seek. Companies like Portfolio Recovery Associates and Midland Financial are notorious for suing consumers and coming to trial without the figurative receipts. The Consumer Financial Protection Bureau has fined and punished these companies for trying to sue people for unpaid debts without the necessary documentation to prove it.
All this means is that you can nip income garnishment in the bud by keeping the debt collector from getting a judgment against you in the first place. Do not ignore any court papers, and never affirm or make payments on a debt that is not yours. It is possible to be responsible for a debt that is not yours when you agree to pay it.
You Can Reach a Settlement Even After the Debt Collector Has Obtained a Judgment
If income garnishment is already happening, there are several ways that you can end it. One way is to reach a settlement agreement with the debt collectors. Their motivation is to get as much money from you as possible quickly. You can negotiate with the debt collectors, and they may be willing to take far less money to settle the judgment. For them, it means that they can take the matter off their books, and they will then turn around and use the money to buy more bad debt so they can make even more in profits in the future.
You May Be Able to Pay Less than You Owe
Never assume that you do not have any leverage when you are dealing with debt collectors. The worst scenario for them is that they will get nothing from you. Debt collectors often come away empty-handed, no matter how vigorously they try to collect from you. All they need to do is get some money from a fraction of the people who owe.
Bankruptcy Can Put a Stop to Income Garnishment
There is something that you have going for you when trying to negotiate with debt collectors. All collection efforts, such as income garnishment, must stop when you file for bankruptcy.
Regardless of whether you have filed for Chapter 7 or Chapter 13 bankruptcy, an automatic stay keeps debt collectors from making any collection efforts so long as the process is pending. They can get in serious trouble if they try to garnish your income once the automatic stay is in effect.
Bankruptcy may also be your way to make garnishment stop once and for all. If you go through the Chapter 7 bankruptcy process, you can get complete forgiveness of your debt, but there is a tradeoff. This type of bankruptcy is known as a liquidation, and the bankruptcy trustee can seize certain assets from you and use them to pay your creditors. However, they cannot seize specific assets. For example, the trustee cannot take your home under most circumstances. The result of a Chapter 7 bankruptcy is that you will get a fresh start, free of many of the debts that made your life much harder beforehand.
There is a strict income limit that you must meet to file for Chapter 7 bankruptcy, but you can still get some relief under Chapter 13 if you do not meet this test. This type of bankruptcy will give you more breathing room, and you will still get an automatic stay. The court will institute a payment plan over a certain period, and once you finish, you will emerge from Chapter 13 and be free of the debt.
You May Be Able to Keep a Certain Amount of Your Income
You can stop the garnishment if your income level is low enough. You need to be making more than a certain amount for a creditor to garnish your check in the first place. State law understands that you need to pay your monthly expenses, and the law’s intent is not for you to be unable to put a roof over your head. Thus, a certain amount of income will be free from garnishment in the first place.
You can seek a suspension of the garnishment if you are experiencing some hardship or have an unexpected financial challenge.
Other Ways Debt Collectors Might Enforce Judgments Other Than Income Garnishment
While income garnishment is a common method of enforcing judgments, it is not the only one. Debt collectors have several other tactics up their sleeves to enforce judgments.
One way debt collectors may try to collect on a judgment is through bank account garnishment. This means that they can freeze and potentially seize the funds in your bank account to satisfy the debt. It is important to note that there are limits on the amount that can be garnished, and certain funds may be exempt from collection, such as Social Security benefits or child support payments.
Another method debt collectors may use is property liens. They can place a lien on your property, which means that if you were to sell or refinance it, the debt collector would be entitled to a portion of the proceeds. This can be a significant hindrance if you are trying to sell or transfer ownership of your property.
In addition to income garnishment, bank account garnishment, and property liens, debt collectors may also employ other tactics such as seizing personal property or filing a lawsuit to force the sale of assets. It is important to understand your rights and legal protections when dealing with debt collection efforts.
Fight Back When the Debt Collectors Are Acting Illegally
Income garnishment is a very harsh result when you owe debt collectors money, and you should do everything you can to avoid being in this situation. You may need to fight back when they improperly try to collect from you. Federal and state law gives you rights and limits to what the debt collectors can do.
A federal law called the Fair Debt Collection Practices Act acts as a truth in the debt collection practices statute. Debt collectors cannot lie to you or make any other false statements concerning the collection of debt. They cannot make up a fictitious debt and try to collect it or do things such as:
- Repeatedly call you to harass and annoy you
- Call you between 8 PM and 9 AM
- Use any profanity or intimidation when speaking with you
- Use threats that you will face criminal prosecution
- Pretend they are a lawyer (or try to collect the debt as a lawyer without the required disclosures)
Once you tell the debt collectors they cannot call you, they must abide by your wishes, and you can control the time and manner in which they may contact you. If they do not listen, they have broken the law.
Suing Under the FDCPA
If you can successfully sue under the FDCPA, you may qualify for the following in damages:
- The actual losses that you have suffered from the debt collector’s illegal conduct
- Emotional distress damage from the ordeal
- Statutory damages of up to $1,000 if it exceeds the amount of actual damages
You can also file a lawsuit under state law. Each state has a law on debt collection practices, many of which are even stricter than the FDCPA. For example, you can collect punitive damages if you file a lawsuit under state law. Your lawyer will review the facts of your situation to help determine how and where you should sue.
If you believe that debt collectors are breaking the law with their conduct, you should contact a debt collection attorney immediately. In the short term, an attorney can help stop the wrongful actions. In the intermediate term, your lawyer can advise you to take legal action that can punish the debt collectors for their actions.
You Pay Nothing Upfront for an FDCPA Lawyer
If you are considering filing a lawsuit against debt collectors, hiring an experienced consumer protection lawyer costs you nothing out of your pocket. Your lawyer only receives payment if you win your case, and you can obtain attorney’s fees as part of a settlement or award. You do not have to pay your attorney anything if you do not win your case.
Debt collectors are counting on getting away with their behavior, but you can stop illegal conduct when they have violated the law.