What Can Credit Card Companies Sue You For – In extreme cases, credit card companies can collect credit card debt from your wages. Credit card companies take your wages by obtaining a court order to force your employer to withhold a portion of your paycheck to pay off your debt.
If you’re struggling with credit card debt or facing debt collection, you may be wondering how the collection process might affect you. This post will help you understand what credit card companies can and cannot do in terms of wage garnishment, and give you options to help you avoid getting garnished in the first place.
What Can Credit Card Companies Sue You For
Credit card companies must get a court order before they can garnish your wages. To get a court order, the credit card company must sue you. If you do not respond to a subpoena sent by the court, the creditor receives a judgment or court order that may allow him to: 
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If the court allows the credit card company to garnish your wages, your employer is required to withhold the court-ordered amount of your wages until the debt is paid in full.
The Consumer Credit Protection Act (CCPA) prohibits employers from firing employees whose wages are garnished for a single debt, but different states have different levels of protection for multiple garnishments. Knowing your state’s wage garnishment laws will help you know your rights if you ever face a garnishment.
State laws protect you from wage garnishment in the following states, unless the garnishment is related to back taxes owed to the IRS, child support, student loans, and court-ordered penalties:
The following types of disposable income cannot be issued unless payments are made in exchange for personal services:
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Most federal benefits are exempt from garnishment, except for back taxes, child support, alimony, or student loans. Some examples of these benefits include:
Federal law limits garnishment orders from credit card companies to 25% of your disposable income or the amount by which your disposable income exceeds 30 times the federal minimum wage, whichever is lower. Disposable income refers to your total salary after subtracting necessary deductions such as taxes and Social Security.
Let’s say your disposable income is $1,000 every two weeks. 25% of that income is $250. The federal minimum wage is $7.25, so thirty times the federal minimum wage is $217.50. Your disposable income is thirty times the federal minimum wage of $782.50 ($1,000 – $217.50). Therefore, credit card companies can receive a maximum of $250 per paycheck.
If state foreclosure laws differ from federal laws, foreclosure follows the law that results in the lesser amount .
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If you’re struggling with your credit card bills, there are a number of ways you can try to protect your paychecks from being garnished. Try using the ideas in the following sections to find a solution with your creditors that avoids foreclosure.
Check with your lender to see if you qualify for any hardship plans. If you do, your lender may be open to negotiating a temporary reduction in payments, a lower annual interest rate, a lower minimum payment, waived late fees, or other terms. Keep in mind that you still owe the debt and hardship programs usually last for a fixed period of time.
If your creditors have already written off your debt as a loss, they may be willing to settle for less than you owe. Because going through the stages of debt collection can be expensive for your creditors, they may want to collect some of your debt rather than collect it all.
Credit counseling offers many ways to meet your unique financial needs. From budgeting help and financial advice to finding ways to manage your debt, look for an accredited agency when considering credit counseling.
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The National Fund for Credit Counseling (NFCC) offers the opportunity to connect with accredited professionals who can offer expert advice in dealing with your debt. Not only can you find solutions to manage your debt, but you can also find a way to form good financial habits to rebuild your credit.
You may want to consider enrolling in a debt management plan (DMP). Similar to debt consolidation, you make single-source payments to pay off your credit card debt, but you don’t take out a loan with this option.
With a DMP, you work with a credit counselor who creates your plan. You then make a single agreed payment each month, which is distributed to your lender. Enrolling in a DMP offers a strategic plan for paying off your credit card debt and connects you with credit counselors who can help you both manage your debt and provide expert advice for your financial future.
Debt consolidation gives you a way to pay off large amounts owed to credit card companies. This strategy involves getting a loan to pay off debt. Instead of paying multiple lenders, you only pay one monthly payment. This works best if your debt consists of more than one creditor.
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Depending on your credit score, you may be able to save money by paying a lower interest rate than what you were paying on a credit card. You can even have lower monthly payments.
Although federal law already limits how much of your disposable income can be subject to wage garnishment, you may find that your state has lower limits on wage garnishment or hardship exemptions. conditions. Because federal law allows for lower arrest limits, consult with an attorney to understand how your state’s laws affect your situation and whether you may be able to file for a waiver, which may bring you some relief.
If all other methods of debt settlement, management, and consolidation do not work, you may want to contact a law firm and speak with a bankruptcy attorney about filing for bankruptcy. Bankruptcy proceedings can discharge or cancel most of your debt. Bankruptcy can stay on your credit report for up to 10 years, so you should think seriously before going down this route.
If you’re feeling overwhelmed by credit card debt, you can either find a strategy to pay it off or reach out to your creditors to come up with a payment plan, but you may need some help to keep your personal finances healthy. Stick to a method that fits your financial situation and stay on track to reach your financial goals.
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Ana Gonzalez-Ribeiro, MBA, AFC®, is an Accredited Financial Advisor® and bilingual personal finance writer and educator dedicated to helping the public in need of financial literacy and advice. Her news articles have appeared in a variety of news publications and websites, including the Huffington Post, Fidelity, Fox Business News, MSN, and Yahoo Finance. She also founded the personal finance and motivational website www.AcetheJourney.com and translated into Spanish the book Financial Advice for Blue Collar America by Kathryn B. Hauer, CFP. Ana teaches personal finance courses in Spanish or English on behalf of the W!SE (Working In Support of Education) program, which has conducted workshops for non-profit organizations in New York.
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Century loans are used for all types of major debt, such as medical, grocery, utilities, auto repairs – you name it. So having credit card debt doesn’t really mean that one is racking up a lot of unnecessary expenses, which is the common perception.
Credit card debt is everywhere. What makes using a credit card so convenient can also lead to serious financial problems. In particular, with a credit card, you have instant access to money and an automatically built-in repayment plan with a very low and affordable monthly payment.
That is, as long as you don’t have too much of a balance or multiple credit cards at once. People can use credit cards easily and affordably for years, until suddenly they hit a wall—payments skyrocket, staggering interest rates go up, and the next thing you know, you’re drowning in huge monthly payments with no further credit on tap. .
Personal loans are also very popular among consumers. Banks, credit unions and
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