One in ten working Americans between the ages of 35-44 are having their
wages garnished due to credit card debt, medical debt, or student loan
debt. This figure comes from
a report in collaboration between NPR and ProPublica.
Previously, people's wages were garnished for child support payments
or unpaid taxes, but in recent years, a dramatic change has occurred,
and now, the vast majority of wage garnishments are for uncollected consumer
debt. New York is among the 5 states in the United States where state
laws protect 90% of debtor's wages.
Unfortunately, the majority of states in this country do not have such
strong protective laws for debtors, and those states allow creditors to
garnish as much as 25% of debtor's wages. Sometimes, courts in those
states even allow creditors to tack on attorney fees on the judgment.
In the wake of the recession, creditors and collectors have aggressively
pursued struggling cardholders and other debtors in court, securing judgments
that allow them to seize a chunk of even meager earnings. Their aggressive
and persistent tactics alongside high interest rates, push hard working
people into default and poverty.
Wage garnishment is often the last resort for banks and debt collectors.
More often than not, debt collectors have also made attempts to seize
money from the bank accounts of these debtors. As a result, some people
prefer to not keep bank accounts or money in their accounts. Although
that may be a temporary preventive measure, there are other adverse effects
including negative or poor credit reports and scores.
The wage garnishment process can be seen as unfair to consumers and debtors
who cannot afford the resources that major credit card companies, banks,
and debt collection agencies have. Lenders can afford to file suits by
the thousands, and when both creditors and debtors go to court, the creditor
is often the only party being represented by an attorney. Even if both
sides are represented by attorneys, the creditor is usually the party
who can afford to pay for highly sophisticated services or to utilize
all options available without considering the cost of those services.
The shift from pursuing child support payments to pursuing consumer debt
indicate that growing emphasis on credit card, student loan, and medical
debt collection, because that is where the money is made. With the problematic
and alarming rate at which these three areas of consumer debt are expanding
in this country, it is no surprise that collectors are becoming more aggressive
in chasing down and extracting money from paychecks and bank accounts.
If you are facing wage garnishment or bank levies related to debt collection, please
contact Lebedin & Kofman immediately.