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If you're a resident of Georgia who owes an unpaid debt, your creditor can and may pursue a civil lawsuit against you to collect. If you lose your case, state law permits creditors to recover the amount owed by placing liens on nonexempt property, seizing money in your bank account or garnishing your wages. If you receive federal retirement or other benefits, you may be able to avoid garnishment of these funds.
Only in rare cases will the IRS turn your refund over to a creditor. Unless your debt is for child support, payments to government agencies, taxes or defaulted student loans, the IRS sends your refund directly to you. However, your creditor can attempt to freeze and levy your back accounts after you deposit your tax refund check.
Paying your debts on time is important for maintaining a good credit standing. Past-due debts affect your credit rating when creditors report late payments and file judgments against you. A judgment creditor may garnish your wages, your bank account and, in certain cases, take your federal and state tax refunds to offset your debt balance.
Tax offsets occur when the federal government intercepts your federal income tax refund for repayment of a debt. The government may intercept all or a portion of your refund. In cases where your refund does not cover the entire debt, the government may intercept future refunds if you have not arranged to pay the remaining debt. If you receive a notice from a federal agency, respond immediately. Immediate attention may help you avoid an offset entirely.
Title III of the Consumer Credit Protection Act (CCPA) sets garnishment limits to protect debtors. Federal law does not distinguish between heads of household, single or married status when setting garnishment limits, but some states set stricter standards than federal limits.
Depending on what type of debt you have, in many instances your debt collectors can assign a wage garnishment and seize a portion of your paycheck. The good news is most creditors are not permitted to touch a single penny of your tax return. However, if you're in debt to state or federal governments, it's a whole different story.
Chances are, if you receive federal disability benefits, you have suffered an injury preventing you from working and earning your own income. The federal government provides these benefits so you will be able to live a normal life. In case a judgment creditor attempts to garnish your federal disability benefits, you have a remedy. The federal government does not permit a creditor to garnish disability benefits, they are exempt from being used to pay creditors.
A creditor may extend credit to a debtor based purely on an evaluation of the debtor's ability to repay the debt. When the debtor does not repay the debt as planned, the creditor may need to resort to telephone calls and letters to persuade the debtor to repay the debt. If the creditor does not succeed in obtaining payment, he may attempt a garnishment action, but the debtor's pension income can be saved from garnishment.
If you have a debt that qualifies for garnishment, you should understand how garnishment works at the state and federal levels. Whether the federal garnishment laws will prevail depends largely on the type of debt incurred.
Bank garnishment is a tool creditors can use to try and collect on a debt. Creditors can ask a judge to order a third party (like a bank or employer) to seize or freeze a portion of a debtor's assets to help pay the money back. In the U.S., the Consumer Credit Protection Act governs bank garnishment laws and provides debtors with certain statutory protections in the event a creditor garnishes their bank.
A wage garnishment is “any legal or equitable procedure through which some portion of a person’s earnings is required to be withheld by an employer for the payment of a debt,” according to the U.S. Department of Labor. Garnishment is an effective process but normally used as a last resort by creditors seeking to collect past due accounts. Garnishment regulations are addressed under Title III of the Consumer Credit Protection Act (CCPA).
Under the Federal Payment Levy Program (FPLP) and the State Income Tax Levy Program (SITLP), the IRS can seize your federal and state tax refund to satisfy a tax debt. The U.S. Department of Education can garnish an individual's tax refund if he defaults on the repayment terms of his student loan. Further, the U.S. Treasury Department's Financial Management Service, responsible for issuing federal income tax refunds, can garnish your refund if you owe child support and other non-tax-related debts. You can take certain steps to stop your refund from being garnished.
