Has anyone ever had their bank garnished due to an outstanding debt?

[yuppicide]

What is the name of your state (only U.S. law)? New Jersey

My Girlfriend has two outstanding credit card debts we cannot pay all at once. They will cut us some kind of deal, but that's only if we pay like $5000 in cash at once.

By law creditors can only take up to so much from your check. I think 25% maximum or something?

So, one of the bills is being garnished out of her pay check. They're taking about $80 every check.

Now the other one is going to court also. At current, she keeps no money in her bank account. Her check is direct deposited and then we withdraw that and pay our bills and stuff.

They can put another garnishment on her paycheck? I assume the total of all garnishments can't be over 25% or whatever it is for New Jersey.

Can they garnish directly from a bank account?

 

[Isis1]

Not only can they get an order to garnish, but your girlfriend will get hit with bank fees every time they have to process the order. And once it hits the bank, anything deposited gets cleaned out. Any depending onstates laws they can do this a certain amount of times each year.

 

[StephenH]

My recommendations:

1) Try to negotiate a payment plan with them. Usually you will have to offer more per month than they can get by garnishment.

2) If they threaten to levy or start levying bank accounts, do the following:

A) Turn off direct deposit. Take the checks to a check cashing store and cash them. Keep the cash in a safe in your house.

B) If you can, close the bank accounts before a levy is issued

C) Pay your bills with money orders

D) Try to pay the creditors as much as you can.


3) If the situation is severe, consider bankruptcy as a last resort.

 

[yuppicide]

Thanks for the info and quick reply! Yeah, that information doesn't sound good.

I don't think the letter mentioned bank accounts, but my Girlfriend did some Google work on her own. I'd like to keep the bank account only because she's had it so long.

I'll probably stop direct deposits as a safety measure, because we wouldn't be able to live month to month without her check.

My check is enough to cover most of our expenses per month, such as rent and car payments, and have some money "left over", but I put left over in quotes back there because there's still cable/electric/food/gas/insurance.

Think I should call the creditor directly or seek a lawyer to do my talking? The paper that came in the mail was from court I believe about a possible judgement.

We've never denied that we owe such money.. one credit card is about $6500, the other is about $12,000. She doesn't have many outstanding bills. Those are the only two large ones. There's also one or two small ones about $150 - $300.

 

[yuppicide]

In the end, we decided to take a loan against her 401k. We called the debt collector and negotiated for about a 25% savings off what she owes.

They'll cancel the court order, they will give us until May 20th to pay them, and they will said us a paid account letter and update the credit bureaus as well.

While the 401k loan will drain $82 from her check each week, we're going to use the rest of the money to pay off her car, so that will be one less bill to pay.

This way we're actually having an additional $60 a month in our pockets.

 

[randolph76]

It's good you're working on reducing your debts. However, I would be leery about making a payment until you have the agreement in writing. I have heard of situations where a creditor agreed to one thing on the phone and went back on their word.

You should call them back and ask for the agreement in writing first.

 

[yuppicide]

Thanks. I already have it. They faxed it over to my office instantly.

The amount they agreed to, and the date I have to pay by. It also states that once the funds clear they will send me the paid letter and update credit bureaus.