While paying your bills on time may give you a feeling of accomplishment and pride, getting behind can have an opposite, devastating effect. When past-due bills are turned over to collection agencies – and their calls and letters go unanswered – the creditor may have no choice but to sue for payment. However, before you find yourself in that situation, be sure to understand what garnishment is and be familiar with the steps you can take to keep it from happening to you.
In order to collect payment of a debt that has gone unpaid and perhaps ignored for an extended period of time, a creditor may file a lawsuit to collect payment directly from your employer. That’s the meaning of garnishment. It is a legal means of collecting payment on a debt by taking payments out of your paycheck, including bonuses and retirement income. Garnishing a debtor’s wages is usually the last tactic a creditor will resort to after all other methods have failed.
Before debt collection gets to the stage of garnishment, there are three basic steps you can take to avoid the process:
Stay current on your debt payments – If you have difficulty keeping track of your various payment due dates, add them to your smartphone’s or computer’s calendar. Include a reminder notice in each calendar post to alert you to make your payment on or before the due date. Or, remind yourself to stay current by writing a budget. List all your payments and when they’re due. Then, check off each one as you pay.
Respond quickly to creditor communications – Soon after a payment is missed and becomes past due, the creditor will follow up with you by phone, email, mail or perhaps even via text message. Usually, creditors are friendly and helpful when a single payment becomes past due. Also, some won’t report one past due payment to credit bureaus if it’s less than 60 days past due. As soon as you become aware of a missed payment, communicate with the creditor – don’t ignore or avoid their attempts to talk with you. Communicating lets them know you intend to make up the payment, get the account current and avoid the possibility of garnishment.
Work out a payment plan – When your account becomes past due by 60 days or more, the credit bureaus receive notice and you sink ever-closer to the risk of having your paycheck garnished. However, when your past-due balance becomes significantly past due or the dollar amount is beyond your ability to pay, that’s when a payment plan is necessary. Again, communication is key. Contact your creditor and ask to arrange a payment plan. Making a payment arrangement is mutually beneficial because you both would prefer to avoid the hassle of garnishment.
Are you facing financial difficulties including the threat of garnishment? The accounting professionals at Donohoo Accounting Services can help get your finances in check. Call 513-528-3982 or email us today.
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