Wage Garnishment Procedures for Credit Card Banks
Wage garnishment is considered the last resort for collection of money legitimately owed, even for credit card companies that want to recover unsecured debt. Before the debtor's wages are garnished, the credit card company must go to court and get a civil judgment against the debtor. Each state has its own laws governing these procedures--and whether wages can be garnished at all.
Other People Are Reading
-
Credit Card Companies & Federal Law
-
When it comes to wage garnishment, private creditors, such as credit card companies, are subject to federal law that restricts them from garnishing more than a certain percent of a debtor's wages. Title III of the federal Consumer Credit Protection Act exempts from garnishment 75 percent of an employee's weekly disposable earnings or 30 times the federal minimum hourly wage, whichever amount is greater.
Garnishment & State Law
-
A credit card company can sue a debtor in any of the 50 states. However, that doesn't mean that state law will permit private creditors to use wage garnishment as a method of collection. While many states' laws conform with Title III, some states permit debtors to claim a larger amount of exempt earnings--85 percent--as well as claim additional exemptions. Some states, such as Texas and Pennsylvania, strictly prohibit wage garnishment by credit card companies.
-
Order of Garnishment
-
In each state that permits wage garnishment, the procedure is essentially the same. The order of garnishment is delivered to the debtor employee and his employer. The employer then deducts the nonexempt amount of the debtor employee's earnings from his paycheck and pays it to the creditor. State law provides for slight variances in the garnishment procedure. In some states, garnishment orders are "continuous" and do not expire until the debt is paid. In other states, garnishment orders expire after a certain number of days, weeks or months, and the credit card company must get another order from the court. States such as New York give debtors a 30-day window before the employer receives an order of garnishment to encourage debtors to pay back the debt.
Drawbacks of Wage Garnishment
-
Credit card companies that decide on wage garnishment as a method to satisfy a judgment face inherent hurdles. The debtor might simply quit her job. Alternately, an employer can fire an employee if she receives more than one garnishment order from a creditor. A debtor may simply opt to file for bankruptcy rather than pay back the debt.
Preventing Wage Garnishment
-
Wage garnishment occurs when debtors don't pay attention to threatening legal notices they receive in the mail from credit card companies. Many private creditors get court judgments simply because the debtor fails to show up in court. The time to address potential wage garnishment is before the credit card company files suit. Debtors should contact an attorney if they believe credit card debt is not legitimately owed.
-
