Credit card companies may garnish (take) your wages just like most other creditors. However, in order to take part of your paycheck, the credit card company must first sue you in court and obtain a judgment. There are steps you can take to avoid a wage garnishment if you are delinquent in your credit card payments.
Learn when credit card companies or debt collectors can garnish your wages to collect on delinquent credit card debt, and what you can do to protect your paycheck.
Delinquent Credit Card Debt
When you get a credit card, you physically or electronically sign an agreement to make monthly payments. This agreement constitutes a legal contract. When you fail to make these payments on a timely basis, you breach this contract. The credit card company has various options to try to collect the debt. One of those is to sue you and garnish your wages.
Beware of interest, late fees, and penalties. When you stop paying on your credit card, the debt begins to mount. Unlike most other debts, credit card debts build up quickly when you default on the underlying agreement. The agreement you signed no doubt includes excessive late fee and penalties when you miss a payment. Those amounts get added to your principle balance and the credit card company reassesses the interest rate on the total sum owed. What was once a $10,000 debt can easily balloon into a $25,000 debt.
When Credit Card Companies Can Garnish Your Wages
Credit card companies cannot garnish your wages without first suing you in court and getting a judgment. That means that if you are behind in your payments, the company or debt collector cannot start a wage attachment unless you agree in writing to the garnishment.
In order to get to your wages, the credit card company must file a lawsuit, obtain a judgment, and then send the wage garnishment documents to your employer. State law requires your employee to comply with those documents or else face court sanctions. To learn more about how this works, see Nolo’s Lawsuits for Credit Card Debt.
Major credit card companies often sell your delinquent credit card debt to debt collectors. Debt collectors buy the debt for a fraction of what you actually owe. Debt collectors then try to collect the debt by getting you make voluntary payments over the phone, Internet, or through the mail. The debt collector can also sue you in court. If it gets a judgment, it too can attach your wages.
How to Protect Your Wages From Credit Card Issuers
If you are in danger of having your wages garnished by a credit card company or debt collector, there are steps you can take to avoid garnishment of your paycheck.
Settle the debt.
Often times the credit card company is willing to accept a settlement in lieu of going through the courts to garnish your wages. This allows you to avoid a lawsuit and wage garnishment. To learn more, see the articles in Managing Credit Card Debt.)
Review state exemptions.
In some circumstances, states allow you to protect a portion of your wages – these are called exemptions. When you receive the wage garnishment notice, find out if your state’s laws allow you protect a portion of your wages. You can file a document in state court claiming the exemption and the judge will decide whether it is valid or not. You can learn more about claiming an exemption in Nolo’s Wage Garnishment & Attachments area.
File for bankruptcy.
Bankruptcy immediately stops garnishment of your wages for a credit card debt. However, filing for bankruptcy affects many aspects of your life and should not be taken lightly. In many cases, you should not file solely to stop a garnishment. To learn more, see our Credit Card Debt & Bankruptcy area.