If you think it is hard to make ends meet now, what would you do if you had 25% of your paycheck taken as a result of a garnishment?
Before I show you how to deal with a wage garnishment here in Oregon (or for most any state), let's get some things straight:
THIS GARNISHMENT DIDN'T JUST HAPPEN!
I can't tell you how many times one of our clients calls to tell us that a debt collector or creditor just garnished their paycheck and they had no idea it would be happening.
OK, I know that in some VERY RARE CASES, they may have not received or seen the SUMMONS that came in person or by registered mail, but in most cases, they got it, but just ignored it.
Brief review of the collection process and how this happened:
If you find yourself in a very difficult financial situations due to a number of things, such as:
- Loss of employment
- Death of spouse or partner
- Illness or disability
- Too little income after retirement
...and, you simply cannot keep up with the minimum payments required by your creditors, here's what usually happens:
When you miss a scheduled payment, you may get a phone call or letter.
If you don't reply or miss another, you ABSOLUTELY will get a phone call or letter....lots of em'!!!
(I'll show you how to ultimately put a stop to these calls later, but for now, let's keep moving through the process that could lead to a WAGE GARNISHMENT.)
The creditors wants to do whatever they can to get you to start making payments again.
You may get a letter offering to "bring your account current if you make "such-n-such" payment by a certain date.
Or, they may say to call them to look into a "Hardship Program" (which I really don't like).
But if you just can't afford any payment after paying rent, utilities and buying groceries, WHAT NOW?
In most cases, the original will CHARGE OFF the balance of the debt you owe them.
This means that they are going to report to the 3 major credit bureaus:
...that they didn't pay them back as promised and they have lost a lot of money!
Your account will most likely be transferred or sold to a debt collection agency. This may even be a Law Firm that only deals with debt collection.
Now, you start getting calls and letters from the debt collector, but the good news is that now, you can LEGALLY STOP THE CALLS.
As long as your account was with the original creditor, they had the right to call you about your account.
But, once that account is charged off and placed with a collection agency, you have the right, according to the Fair Debt Collection Practices Act, to demand that they stop calling you.
The letters will continue, but the annoying, and sometimes HARASSING phone calls will stop. Here's how you do it:
But, just because they have stopped calling doesn't mean that they have stopped trying to collect!
If they cannot get you to start making payments to them (they may even offer a reduction in the balance...called a SETTLEMENT) then they may decide to FILE A CLAIM against you in your county's courthouse.
The debt collector's CLAIM say that you have not fulfilled the promise to repay this debt and they are going to seek legal action against you....sue you!
You will get a SUMMONS, and it will state all of the above and it will state that you have 20-30 days (varies by state) in order to give an ANSWER.
OK, lots of "big words" there, so let me give a simple definition:
This is when the creditor and/or the debt collector agrees to a substantial reduction of the balance to settle this account, once and for all.
If your interested, here's some actual examples of settlements we have negotiated for some of our clients:
The Debt Collector or in some cases the original creditor files a claim in court that you owe them money. When this happens, you get "served" a SUMMONS.
The summons names you as a DEFENDANT and the Creditor or Debt Collector is the Plaintiff. They have "claimed" that you owe this debt unless you can prove it, and I mean, absolutely prove it with copies of canceled checks, etc.
If you know, for certain AND CAN PROVE IT....FOR CERTAIN, then you have the legal right to file AN ANSWER with the court. Not only does it cost you a FILING FEE (I believe it is about $165 here in Oregon), it has to be legally correct.
In other words, you may think about hiring an attorney to prepare the ANSWER. And, of course, that costs more money!
But, IN MOST CASES, you really do owe the money, so giving an "ANSWER" is not necessary.
So, NOW WHAT?????
If you cannot negotiate a settlement or arrange a repayment agreement, the Plaintiff (debt collector), may decide to just go forward with a court date in order to be awarded a JUDGMENT.
Once the JUDGMENT has been awarded to the Plaintiff, they can apply for a WRIT OF GARNISHMENT.
This Writ of Garnishment is sent to your employer and your employer has no choice but to honor it. This means that they are going to withhold (after all of the other withholdings) another 25% of your net, take-home paycheck!
So you see, this garnishment didn't just happen....there was a long process and it could have been stopped numerous times along the way!
What too many people do when they finds themselves in a terrible, financial hardship is to "hide their head in the sand" rather than seek numerous solutions.
Believe me, the last thing most creditors what to do is to have to spend the time and money to file a claim, follow up with calls and letters to you, and possibly spend more money in setting a court date, paying an attorney to represent them, etc.
Last week, we had a client call us to say that she had neglected to act on a summons she had received and the creditor (plaintiff) had been awarded the judgment....acted on the judgment....and her HR department sent her a message that her check would be garnished about $500!
We were able to contact the attorney for the collector and negotiate a repayment plan (you rarely get much, if any of a reduction/settlement after a judgment has been awarded) whereby our client agreed to pay only $200 per month until the balance was paid.
She could not handle the loss of $500, but she could make $200 work.
Here in Oregon (or in any state for that matter), the best way to deal with a garnishment is to not let it get to that state.
But, if it has, then you may be able to get a reasonable repayment agreement in place.
If you need help or guidance, let us know: