If you have recently received a telephone call from a debt collection agency threatening to garnish your wages, what action should you take? Conventional wisdom you'll find on the Internet says to avoid it at all costs.
You'll also find lots of information about different ways to get rid of a wage garnishment once it is in place.
But might there be conditions when to use wage garnishment to settle debts actually makes sense? While this may seem contrary to everything you've read and been told, the answer is yes, there are.
To understand this seeming contradiction in logic, let's first review how a wage garnishment happens.
To many hard working and honest Canadians down on their luck due to circumstances beyond their control, it might be hard to accept the fact there are some not so honest people out there who will do anything to get out of paying a valid debt, even if they can afford to pay it off.
And it might further surprise you to know that banks and other lending institutions are themselves in a bit of trouble.
They are faced with mountains of unpaid debt and debtors who are increasingly unable to pay.
Consequently, they will do anything in their power to collect.
Here are the major means at their disposal:
First you have to be properly notified and given a chance to dispute the debt.
Next they have to go to court to get a legal judgment against you for the amount owed and then they decide how best to come after you.
In most cases they have already searched local property records so if you own no property, a lien is out of the question.
If your bank balance is low, they may go after your income.
With judgment in hand they must go back to the court again for the legal order allowing them to garnish your wages.
Now here's where using garnishment as a means to settle a debt begins to make sense.
There are limits on how much they can garnish.
The courts simply will not allow them to reduce you to the status of a beggar in the streets holding a tin cup.
If you are on any kind of government assistance payments they are untouchable.
And of course, the lower your income the lower the amount will be that they can garnish.
Now comes what can be a deal-breaker for many creditors; - there are time limits to a wage garnishment.
If your debt is high enough and your income low enough that it would take 10 years to pay it back, they will have to go back to renew that garnishment order every year.
Filing and appearing in court costs the creditors money and at some point it can become a losing proposition for them.
They can see that once the garnishment is in place, but not before.
That's the time when you can go to them to either ask them to write off what you owe them as a bad debt or negotiate a repayment settlement you can afford.
If you have no assets and not much money in your bank account for them to come after and your income is low, that's the time when to use wage garnishment to settle debt makes sense.
You'll also find lots of information about different ways to get rid of a wage garnishment once it is in place.
But might there be conditions when to use wage garnishment to settle debts actually makes sense? While this may seem contrary to everything you've read and been told, the answer is yes, there are.
To understand this seeming contradiction in logic, let's first review how a wage garnishment happens.
To many hard working and honest Canadians down on their luck due to circumstances beyond their control, it might be hard to accept the fact there are some not so honest people out there who will do anything to get out of paying a valid debt, even if they can afford to pay it off.
And it might further surprise you to know that banks and other lending institutions are themselves in a bit of trouble.
They are faced with mountains of unpaid debt and debtors who are increasingly unable to pay.
Consequently, they will do anything in their power to collect.
Here are the major means at their disposal:
- Property Liens
- Bank Account Attachments
- Wage Garnishments
First you have to be properly notified and given a chance to dispute the debt.
Next they have to go to court to get a legal judgment against you for the amount owed and then they decide how best to come after you.
In most cases they have already searched local property records so if you own no property, a lien is out of the question.
If your bank balance is low, they may go after your income.
With judgment in hand they must go back to the court again for the legal order allowing them to garnish your wages.
Now here's where using garnishment as a means to settle a debt begins to make sense.
There are limits on how much they can garnish.
The courts simply will not allow them to reduce you to the status of a beggar in the streets holding a tin cup.
If you are on any kind of government assistance payments they are untouchable.
And of course, the lower your income the lower the amount will be that they can garnish.
Now comes what can be a deal-breaker for many creditors; - there are time limits to a wage garnishment.
If your debt is high enough and your income low enough that it would take 10 years to pay it back, they will have to go back to renew that garnishment order every year.
Filing and appearing in court costs the creditors money and at some point it can become a losing proposition for them.
They can see that once the garnishment is in place, but not before.
That's the time when you can go to them to either ask them to write off what you owe them as a bad debt or negotiate a repayment settlement you can afford.
If you have no assets and not much money in your bank account for them to come after and your income is low, that's the time when to use wage garnishment to settle debt makes sense.