In this economy, I have met with countless clients and prospective clients who are drowning in debt. Whether it is a home equity line of credit, credit card debt, a business loan, or other unpaid personal or business obligations, there is a possibility and even the likelihood that sooner or later your creditors will come to collect.
Oftentimes, creditors will attempt to collect by filing a lawsuit in court naming you or your business as a defendant. By filing suit against you, your creditor is attempting to get a judgment – or an order from the court – ordering you to pay what is owed, possibly in addition to your creditor’s attorney fees and costs.
However, if and when your creditor obtains a judgment against you, he or she is only halfway through the process of getting the debt paid. A judgment ordering you to pay your creditor is simply a piece of paper. If you do not voluntarily pay the judgment amount after the judgment is entered by the court, your creditor will need to take additional legal steps to collect the judgment amount.
For a creditor, getting the judgment is the easy part. Much more difficult and time consuming is the legal process to collect the judgment amount owed. Your creditor – now the Judgment Creditor once the judgment has been obtained from the court – has a number of legal options in trying to collect from you. Once a judgment is obtained, you – the Judgment Debtor – can voluntarily pay the amount that is stated in the judgment. However, if you could voluntarily pay, why wouldn’t you have just paid that amount in the beginning if you truly owed the amount in question?
More likely, you – the Judgment Debtor – do not have the means to pay the entire amount owed so you might enter into an agreement with the Judgment Creditor to pay off the amount owed over time. Again though, if you had the ability to pay over a period of time and you were willing to do that, why wait until the judgment is obtained to enter into an agreement to pay the amount owed. If you waited until after the judgment was obtained to enter into an agreement to pay the judgment amount, you are now likely also paying the Judgment Creditor’s attorney fees and costs expended to obtain the judgment and also additional interest.
On the other hand, you may feel like you have no ability to pay any amount. Nevertheless, the Judgment Creditor still has a number of legal options he may pursue to collect on the judgment.
One of the most common collection methods is either an EARNINGS or NON-EARNINGS GARNISHMENT.
With an EARNINGS GARNISHMENT, the judgment creditor – after the judgment has been obtained – can apply to the court for a Writ of Garnishment.
Once the Writ of Garnishment for earnings is obtained, a copy of the Writ signed by the judge will be served on your employer or whoever is responsible to pay your wages for your employment. Your employer will then be required to respond to or answer the Writ of Garnishment. If your employer answers the Writ and states that you are indeed employed with them, the court will then enter a Garnishment Judgment against your employer ordering your employer to withhold a portion of your paycheck – generally no more than 25% – and to pay that amount directly to the Judgment Creditor until the judgment is paid in full.
With a NON-EARNINGS GARNISHMENT, a Judgment Creditor will follow the exact steps described above but will seek to garnish money or assets (non-earnings) that belong to you but that are held by some other third-party.
The most common type of non-earnings garnishment is when a bank holding your checking or savings accounts is served with a Garnishment Judgment and money in your checking or savings account is set aside from those accounts to be paid directly to your judgment creditor.
For those with experience, an EARNINGS or NON-EARNINGS GARNISHMENT is a relatively easy collection method to employ to collect from a judgment debtor.
If you are being pursued by a creditor, especially if any creditor has already filed a lawsuit against you to collect an amount they claim is owed by you, it is always better to be proactive and to consult with an attorney to try and avoid the judgment altogether or at least to try and avoid the collection methods – including garnishment – that can and will be used against you.
