Garnishments for consumer debt more common

On behalf of Bankruptcy Law Firm of Clare Casas on Wednesday, September 17, 2014.

Everyone with a credit card or other consumer debt in Florida may be interested in newly released research. Payroll processor ADP recently completed a study to determine how common payroll garnishments are for workers in the 35 to 44 age group. The study examined how many people were getting their wages garnished and the reason for the payroll withholding. The results showed that more employees were being garnished for consumer debt and medical bills than for unpaid child support. Overall, 3 percent of workers, or 4 million people, were having their wages garnished to pay for consumer debt in 2013.

In addition to wage garnishment, creditors may also get permission from the court to seize funds held in bank accounts. Many of the people interviewed for the study were also subjected to this debt collection tactic. A survey of court records in eight states showed that most collection lawsuits were filed by credit card companies, payday lenders and medical providers. A large portion of the filings were made by companies that buy bad credit card debt.

Garnishment laws vary by state. While some states, such as Florida, will not allow creditors to seize so much money that the employee falls below the poverty level, nearly half of all states allow up to 25 percent of a person’s wages to be garnished until the debt is paid. Bankruptcy may be an option for people who have been subjected to wage garnishment.

An attorney who has experience in bankruptcy law can advise a client who has either been sued for a bad consumer debt or who has received notice for their wages to be seized. The automatic stay feature of bankruptcy will stop the collections and give an employee the opportunity to discharge the debt or reorganize it along with other debts they may owe.

Source: NPR, “Millions Of Americans’ Wages Seized Over Credit Card And Medical Debt“, Chris Arnold and Paul Kiel, September 15, 2014