Credit Card Wage Garnishment

judge's gavelQ: Can credit card companies garnish wages? I have stopped paying on my card and am worried about garnishment.

A: Once you default on a bill, the party which is owed the money has various options they can take to try and recoup their money. But is credit card wage garnishment one of those options? Well that depends, but most likely yes. Here’s what you need to know…

Understanding State Laws

The options a creditor has for going after you vary state by state. For example in Georgia “all cases where a money judgment shall have been obtained” wage garnishment is permitted… so that basically means any type of debt is subject to garnishment. Meanwhile other states may only allow garnishment on secured debt, not unsecured debt like credit cards. In my state of California, credit card wage garnishment is legal, but the law doesn’t allow money to be taken from the debtor’s bank account if the balance is below a certain point (I believe the threshold is somewhere between one and two thousand).

But even if wage garnishment is legal…

…the credit card company can’t simply garnish your wages by themselves. They will need to first go to court and be rendered a judgement which permits garnishing wages. When this happens you can attempt to file a motion to quash the garnishment, but to be honest, that will be very difficult to do. Typically, the judge will also decide what percentage of your wages can be withheld – usually they can only without “disposable income” when it comes to unsecured debt.

The odds are that…

…credit card wage garnishment is legal in your state. It’s just a matter of finding out the details – i.e. what’s the maximum amount they can withhold, what’s the statue of limitations on the debt, etc. Nowadays creditors are more aggressive than ever with recovering bad debt… so if you owe any sizable amount (say, in the thousands) it’s very possible your credit card company will try and garnish your pay.

But it’s also possible they won’t. Simply put, it’s sometimes not worth their effort to pay attorneys to go after people who they know don’t have the money to pay back. So just because they can sue you, it does not necessarily mean they will.

What are your options?

You should consult an attorney (keep in mind this post is not legal advice). However if you’re like many people in this boat, odds are that you can’t afford to shell out money to do that. If that’s the case, most communities have a free legal aid center for those that can’t afford to pay someone… they should be able to offer you some wage garnishment help.

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This is why it’s better to pay the minimum payments if possible…