What can I do about my wages being Garnished?
Debts can be either secured or unsecured. A secured loan is one that requires the debtor to pledge something of value as collateral for the loan, such as home mortgages and auto loans. The lender has a "security interest" in the collateral/property that secures the debt. When a debtor defaults in payments, the "secured creditor" can simply repossess the collateral/property. Generally, however, most consumer debt (other than for houses and automobiles) is unsecured, including credit card debts, revolving credit at retail stores and student loans, and creditors are general creditors whose collection activities are more
limited prior to obtaining an actual judgment against a debtor.
Once a borrower defaults on making payments, a creditor may send reminder letters, charge late fees, add accrued interest to the new balance, or double the amount owed for the following month. The next steps in collecting the debt would be for the creditor to contact the
debtor directly and/or turn the matter over to an internal collections department. Typically, letters from the internal collections department of a creditor will ask the debtor to send payment or contact the creditor immediately. If a creditor is unsuccessful in collecting a debt
payment, it may retain an external collection agency whose actions are regulated by federal laws, such as The Fair Debt Collection Practices Act, and similar state laws. Within five days of its first telephone call to a debtor, a collection agency must send a notice in writing that
states the total amount owed, and the name of the original creditor for whom the agency is attempting to collect. The written notice must also inform the debtor that he or she has 30 days from receipt of notice to dispute the debt in writing, and/or request a written verification of
it. The collections agency will forward the net balance (after deducting its percentage of the recovered amount) of any payments directly received from a debtor to the original creditor.
If a collection agency is unable to secure payment or contact with a debtor, creditors may file a lawsuit as a last resort in local state or federal court generally grounded in contract law. Once the debtor's account file has been turned over to an attorney for litigation (who
will also be subject to the Fair Debt Collection Practices Act if he or she regularly engages in the collection of debts), the debtor's chances of negotiating payment or settlement with the creditor are slim and the debtor will most likely be responsible for the payment of all attorney
fees and costs associated with collection efforts, in addition to the original debt owed. A creditor, or attorney acting on its behalf, will invoke any "acceleration clause" that will "accelerate" all future payments so that the entire loan balance (not just the payments in
arrears) is immediately due and payable in full. There are very few available defenses to the debtor, except those permitted by the Uniform Commercial Code for defective products. Damages are limited to the face amount of the loan balance, accrued interest, (sometimes) attorney fees, and court costs. If a defendant-debtor fails to appear in response to
the lawsuit, a default judgment will likely be entered against him or her.
After a judgment is entered against a debtor, the creditor will employ various tactics to collect on the judgment. State laws dictate the number of years a creditor may pursue collection on an outstanding judgment; typically, they are 10 to 20 years. Generally, any assets
debtors acquire over this time period can be seized or forfeited in satisfaction of an outstanding judgment. Following successful judgment against a defaulting debtor, creditors will usually ask a court for a creditor's hearing, in which the debtor must make a sworn declaration of
all assets and property, including exempted property (such as a primary residence up to a certain value, vehicles not used for employment, tools used for employment, some personal effects and household goods, and life insurance/retirement proceeds). Creditors may present a copy of their court judgment, along with a "writ of execution" form, to local law enforcement officials who will "execute" the writ and seize the property.
A judgment creditor may also request that the court issue a writ for garnishment of the debtor's wages. If granted, the court order for garnishment is served directly upon the debtor's employer, who must comply with its terms. Wage garnishment is a legal procedure governed by
state law in which a person’s earnings are required by court order to be withheld by an employer for the payment of a debt and paid directly to the judgment creditor by the debtor's employer. There are different types of garnishments, as defined by state laws, which vary by state. A garnishment may be made on a one-time or continuing basis. Some kinds of
income are exempt, which means that they cannot be garnished at all by
creditors for consumer debts, including welfare, unemployment, veterans
benefits, Social security, workers' compensation, pensions, and child
support payments that you receive. For ordinary garnishments (i.e.,
those not for support, bankruptcy, or any state or federal tax), the
weekly amount may not exceed the lesser of two figures: 25 percent of
the employee's disposable earnings, or the amount by which an employee's
disposable earnings are greater than 30 times the federal minimum wage.
The Fair Debt Collection Practices Act of 1977 (15 USC 1601) is enforced
by the Federal Trade Commission and protects consumers from illegal or
improper practices in debt collecting. It only applies to consumer debts
and not to business debts and not to collection efforts made directly by
the creditor to whom the debt is owed. What may be perceived as improper
conduct or harassment by a debtor may not in fact be illegal or improper
under the Act. For specific actions prohibited by collection agencies
under the Act, please see
Creditors that violate the rights of debtors should be reported to the
Federal Trade Commission (www.ftc.gov
National Consumer Law Center (www.consumerlaw.org
consumer law attorney practicing in the area.
For specific Mississippi laws regarding garnishment, please see