Moves to Garnish Pay Rise as More Debtors Fall Behind

[babylonsister]

Moves to Garnish Pay Rise as More Debtors Fall Behind

By JOHN COLLINS RUDOLF
Published: April 1, 2010


PHOENIX — When the bank sued Leann Weaver for not paying her credit card balance, her reaction was typical for someone in that situation. Personal and financial setbacks weighed her down, and she knew she owed the $2,470. So she never went to court to defend herself.

She was startled by what happened next. When she swiped her debit card at the grocery store, it was declined. It turned out Capital One Bank had taken $224.25 from her paycheck, a quarter of her wages for two weeks of work at a retail chain, and her bank account was overdrawn.

“They’re kicking somebody who’s already in the dirt,” she said.

One of the worst economic downturns of modern history has produced a big increase in the number of delinquent borrowers, and creditors are suing them by the millions. Concern is mounting in government and among consumer advocates that the debtors are not always getting a fair shake in these cases.

Most consumers never offer a defense, and creditors win their lawsuits without having to offer proof of the debts, much less justify to a judge the huge interest charges and penalties they often tack on.

After winning, creditors can secure a court order to seize part of the debtor’s paycheck or the funds in a bank account, a procedure called garnishment. No national statistics are kept, but the pay seizures are rising fast in some areas — up 121 percent in the Phoenix area since 2005, and 55 percent in the Atlanta area since 2004. In Cleveland, garnishments jumped 30 percent between 2008 and 2009 alone.

more...

http://www.nytimes.com/2010/04/02/business/economy/02garnish.html?hp

[hobbit709]

1. One of the good things about TX

The only thing your wages can be garnished for here is nonpayment of child support or taxes.

[OKNancy]

2. After reading the whole article, I think people shouldn't be afraid

of bankruptcy. Although it says it may cost $2,000 to file, I know many lawyers who would take less, or allow a payout.
Your credit is ruined anyway, so it seems the stigma of bankruptcy is better than being sued and having your wages garnished...and still owe triple the amount of your debt.

[SpiralHawk]

3. "All your money are belong to us." - Republicons

"So you noisy American proles can just STFU. Smirk."

- Republicons