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Columns: The Debt Adviser
Steve Bucci   Expert: Steve Bucci
The Debt Adviser
Wage garnishment can be a debtor's prison without the bars
The Debt Adviser

Court order required to garnish wages

Dear Debt Adviser,
Can a collection company garnish wages before taking me to court? What do I do if they threaten garnishment? How soon can a collector garnish a wage after the collector owns the debt?
-- Chris

Dear Chris,
In the United States we don't have debtors' prisons. Instead, we have garnishment laws, which are about as close as you can get without the bars. Lenders need to know that they have serious remedies available in case of default or they can't lend as freely, or to as many people, as they do. So, as much as I dislike the thought of taking a working person's wages, there is a case to make that it has a benefit.

As to your situation, according to the U.S. Department of Labor, "wage garnishment occurs when an employer withholds the earnings of an individual for the payment of a debt as the result of a court order or other equitable procedure." Since I don't think we are talking about the IRS here (that's one of those other "equitable procedures"), the answer to your first question is no. A legal process followed by a court order is required. During this legal process you can get a lawyer and go to court to show your side of the issue and perhaps affect the outcome.

From your second question, it seems you feel like this may only be a matter of time. Obviously since a collector is now involved, you have a debt out there that is unpaid and yes, they may threaten wage garnishment. And yes, they could win. As to what you should do, the short answer is: everything you can. 

My experience with collectors tells me that they start tough and finish tough, but that in the middle of the process there may be some room for accommodation. I'd like to see you go to a reputable credit counseling agency to see if they can help either with a budget that frees up money or a concession that reduces the debt payment. Armed with a budget and a realistic, third-party estimate of what you can pay, I'd make the best offer you can afford to pay to a manager at the collection agency.

As to how soon the collector will seek garnishment, the answer is probably twofold. First, they have to feel they are at the end of the road from their perspective for collecting the debt. This means they either aren't going to make progress or it won't be fast enough for their company or the one they are collecting for. The second part can be as soon as they think they have a case that they can show to the judge that indicates you were given a chance to pay, but decided not to. 

Because we are talking about the judicial system, these things do take time. The first thing that must happen is that the case is heard in court and a judgment against you will be issued in the form of a court order. This judgment will detail the amount you owe and the interest rate you will have to pay on that amount. If you don't pay then, next comes an execution order and then the garnishment.

Still, you do have rights. Title III of the Consumer Credit Protection Act protects you from being fired if your pay is garnished for only one debt and limits the amount of money that may be garnished from your wages. Each state has a garnishment law with some variations on the topic. I encourage you to check them out to know where you stand and what you have to lose.

The bottom line is this: If you owe this debt, you need to find a way to come to terms with it and the collector. Cut your expenses to the bare bones and/or get a second job for the short term if possible, but do your best to pay this debt off before wage garnishment becomes your own debtor's prison.

Bankrate.com's corrections policy -- Posted: Oct. 5, 2007
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