The best time to negotiate payment arrangements with your creditor is before the debt turns into a court case, but that does not mean you are out of luck once the court grants your creditor a garnishment. While you have lost a lot of your bargaining power, the court system still offers you options.
A garnishment is a last-ditch effort to collect monies owed. Your creditor and his attorney may be reluctant to negotiate payment arrangements after the court gives a creditor the right to garnish your wages or bank account. The creditor now has the right to leave you out of the equation and go directly to your source of income to get payment, and you have broken faith by not paying your bill in a timely manner.
A creditor can garnish up to 25 percent of your income or any amount above 30 times the current minimum wage, if you let the garnishment go through the court system unopposed. That is more than most people can comfortably live without. Garnishments for child or alimony support and to pay or to pay for debt owed to the government, such as the Internal Revenue Service, are subject to special rules that may depend on the state in which you reside. Keep in mind that income is more than just your wages, but certain income is protected. The protected income includes many forms of government payments, such as unemployment compensation, veteran benefits, Supplemental Security Income and payments to needy families. Certain community property income and joint income may also be exempt from garnishments.
The court realizes a garnishment is a hardship and is prepared to listen to you present an argument as to why the garnishment should be vacated or reduced. If you cannot come to an equitable agreement with your creditor, contact the court clerk. The court clerk with schedule a time for you to go to court and ask for a modified judgement. Be prepared to show why the garnishment is a hardship by arriving a court with proof of income and living expenses. The proof of income can also be used to prove your income is protected from garnishments.
The best course of action is to avoid letting unpaid debt make it as far as a lawsuit. That may seem impossible if money is short, especially with collectors calling repeatedly. The first step is to communicate with your creditor. Try to come up with new payment arrangements that better match your current financial situation. Once the creditor agrees to new terms, make sure you live up to the new arrangements. The creditor will be less forgiving the next time you miss a payment.
Last Resort When the money just is not there to handle a garnishment, the creditor is unwilling to discuss a payment arrangement and modified garnishment goes not provide enough relief, consider filing for bankruptcy. Bankruptcy will stop unsecured debt garnishments from the time you file for bankruptcy. The bankruptcy can end with you permanently free of the garnishment and the related debt. Start fresh from ground zero and rebuild your credit.