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.