Credit card companies can garnish (take) your wages just like most other creditors. However, before taking part of your paycheck, the credit card company must first:
If you’re delinquent in your credit card payments, you can take steps to avoid a garnishment. Learn when a credit card company or debt collectors can garnish your wages to collect on delinquent credit card debt, and what you can do to protect your paycheck.
Find out who else can take this step in Who Can Garnish My Wages?
When you get a credit card, you agree to make monthly payments. This agreement constitutes a legal contract. When you don’t make these payments on a timely basis, you break (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 quickly due to excessive late fees and penalties the company can charge when you miss a payment. Not only do these amounts get added to your principal balance, but the credit card company might be able to raise your interest rate, too.
A wage garnishment shouldn’t come out of the blue. Credit card companies cannot garnish your wages without taking some steps. So you should have adequate notice.
Here’s a synopsis of the process:
Of course, if you owe the debt, it will be difficult to defend the case. Instead, if you don’t answer the complaint, the court will issue a money judgment by default. You’ll lose automatically, and the creditor will be able to collect sooner.
To learn more about how this works, see Credit Card Debt Lawsuits.
Major credit card companies sell your delinquent credit card debt to debt collectors. You’ll know this has happened if you see a charge off notation on your credit report. You’ll still owe the account—but you’ll owe it to the debt collector, not the original credit card company.
Debt collectors buy the debt for a fraction of what you owe, then try to get you to make voluntary payments. The debt collector can also sue you in court. If it gets a judgment, it too can attach your wages.
If you are in danger of having your wages garnished by a credit card company or debt collector, here are some steps you can take to avoid garnishment of your paycheck.