The powers that be would love to have us all believe that the world is very different now than it was prior to the Financial Collapse of 2008. In reality very little has changed. Congress remains stalled on reforming the financial system that pushed the United States to the brink of collapse. Housing sales have begun to slow again due to the end of Federal tax breaks for new home purchasers. Unemployment remains high even though the Census has created thousands of temporary jobs. And foreclosure rates remain high throughout the nation.
While companies like General Motors, Chrysler, and AIG have benefited from billions of tax dollars to keep them from collapsing, the individual American with two cars, two jobs, two kids and two mortgages continues to face phenomenal challenges in meeting and servicing their debt.
While the financial industry has been keeping the spotlight on the foreclosure crisis, many consumers are facing increased challenges related to medical bills, credit cards, and other types of unsecured debt. The recklessness that exists in the mortgage foreclosure world is even worse in the world of unsecured debt collection.
The most recent story to be featured nationally was on the NBC’s Today Show. A mother in Arizona was behind on her credit card payments. Unbeknownst to her she was sued by a debt collector who was able to take a judgment against her. She only discovered the existence of the judgment when her paycheck was significantly reduced. After inquiring with her employer she discovered that a wage garnishment was in place and that her pay check was now reduced.
Wage garnishments are bad enough but an unknown wage garnishment is the absolute worst threat to the financial stability of a household. A wage garnishment occurs when a creditor goes around you and begins collecting money directly from your bank account or from your payroll earnings. Regularly, clients tell me that they feel forced into bankruptcy as a result of wage garnishment. Most states allow up to a 25% of earnings to be deducted from a check. The reality is that if you can not afford to pay your credit card bills how in the world can you afford a 25% reduction in your paycheck.
The mother featured on the Today Show was fortunate in that she was guided to a Consumer Rights Attorney. That attorney was able to investigate the record and determine that her legal rights had been violated. Taking a judgment against an individual who has not been served is a significant violation of the Fair Debt Collection Practices Act (FDCPA). In the Today Show story the mother was able to recover the garnished money and had her attorney’s fees paid by the debt collector. It is illegal for a debt collector to take your money without telling your first. It really is just that simple!
If you have been sued by a debt collector and you have been properly served and are facing garnishment often times the only option is to file Bankruptcy. In many instances this is not the choice people prefer but it is the best way to allow you to retake control of your finances. Most consumers have the option of filing a Chapter 7 bankruptcy and getting a fresh start or filing a Chapter 13 bankruptcy and reorganizing their financial situations.
The important thing to remember if you are facing such a financial situation is that you may have options. When looking to defend your rights make sure you ask any prospective attorney:
- Have my rights under the FDCPA and/or Kentucky state consumer protection statutes have been violated?
- Is it possible to stop the garnishment without filing Bankruptcy?
- If I have to file Bankruptcy what steps will you be taking to keep debt collectors from harassing me in the future?
As the financial crisis continues to evolve more and more families will be facing difficult decisions regarding how to spend their precious dollars. The most important think you can achieve is to make sure that you have control over your finances.