What Can Debt Collectors Really Touch & Take? - Part I

If you’ve ever been on the other end of a debt collection call, you may have heard all kinds of threats coming from the person trying to collect a debt. Can a creditor take money from your paycheck? How much and for how long? These are the questions that we will be answering in the first part of this article series.

We will also be exploring whether or not a collection agency can take bank account funds, whether or not situations are unique for military members, and if some creditors can also take social security or retirement funds, so make sure to check back!

The Debt Collection Process

  • Some states do not allow certain types of debt collectors to garnish wages. States that do not allow “commercial debt garnishment” (credit cards and other commercially-based companies) include Pennsylvania, Texas, North Carolina, and South Carolina.
  • If a state does allow a collection company to garnish wages, that company must first sue the debtor. Why? A court must hand down a judgment in order for that company to move forward with taking wage money. If the court does not rule in favor of the creditor, no wages can be taken.

What if the court rules in favor of the collection agency? A specific percentage that the creditor is legally allowed to take will be determined. After that judgment has been made, the collection company will make arrangements with your employer to withdraw that percentage directly from your paycheck.

How Much Can They Take?

Here’s where things get a bit tricky, but these are some general guidelines to help you figure out what you may be up against if a judge finds in favor of a debtor. (Remember these rules are State-specific, so please check the rules in your State)

  • Federal law states that up to 25% of disposable income (the money left over after taxes and other obligations have been paid) or the amount that exceeds the federal minimum wage by 30 times (the lesser amount will be taken) can be deducted for the following types of debts: medical bills, student loans, and credit card balances. Each state has a specific set of laws concerning this topic, so make sure to check the laws in your state.
  • In some states, entire paychecks can go towards any outstanding state tax balance. In other words, if you owe tax money to your state, your entire paycheck can be taken until that amount has been paid off.

How Long Does it Last?

Whether or not a creditor has the right to garnish your wages until your debts are paid in full depends on two things: the court ruling and the state that you live in. Some states allow creditors to collect money until a debt is paid off plus the interest accrued.

In other states, creditors can only collect wage funds for a period of 60 to 90 days. In certain cases, a creditor can file for another court ruling once that time limit has expired, so it could be extended to more than 60 or 90 days.

Some Quick Tips

What can you do to avoid court and wage garnishment?

  • Do not ignore your debt collectors. Answer the phone and try to arrange a deal, or speak with an experienced attorney to help you negotiate.
  • Take note of the time of day that you talked to a creditor, and what that person’s name or employee ID number is.

Has Judgement Been Issued?

If you’re already facing a court order for wage garnishment, there are things that can be done including contesting that ruling. Other options might be available depending on your specific case. If you are facing debt collection calls daily, are not sure what to do, or have already been served with a garnishment, let us help you.

As discussed above, different states have different laws when it comes to debt collector remedies, so please contact an experienced attorney in your State. If you’re in Florida, let one of our experienced and dedicated attorneys help! Call the Dellutri Law Group today for your free case evaluation at (800) 391-4337 or visit our website to schedule.