Wage Garnishment and Court Ordered Repayment Plans
Debt is huge negative force in our society. Many people start out their adult life with huge amounts of debt making it very difficult to become debt free. With debt so common, being unemployed, having a health issue or other form of financial bad luck can cause many to be deep in debt.
If you owe debt, you should be aware of the ways in which creditors can come after you to repay your debt. Creditors are satisfied when minimum payments are made on time, however, even missing one payment or being unable to pay your debt for a short period of time can cause creditors to seek legal ways to force you to pay your debt. Two common methods that are used by creditors to force debtors to repay their debt are wage garnishment and court ordered repayment plans. Here is some information regarding each.
Wage Garnishment
A wage garnishment is when an employer is requested to remove part of the income from a paycheck for an employee who owes debt. The income that is removed is sent by the employer to either the creditor directly or to the court. Usually, only a small percentage of the overall income is allowed to be garnished. In most states the percentage is about 10%; however one of the strengths of wage garnishment is its social implications. Most employees don’t want their boss to know they have financial difficulties. It should be noted that in order for a wage garnishment to occur a judgment must first be placed on the individual. However, if you owe money to the IRS, a judgment is usually not needed in order to enact a wage garnishment.
Court Ordered Repayment Plans
A court ordered repayment plan is where you work directly with the court in order to pay off a debt to a creditor. For instance, if you can’t come to terms with a creditor on your repayment of debt, you can ask the court to create a repayment plan. In most cases, the court will set up a repayment plan in which you will repay the entire amount of debt in a 36 month period. In order for you to set up a repayment plan with the court, you first must have a judgment against you and in many cases must first try to come up with an agreement for repayment with the creditor.
