Garnished. Any value in contacting creditor?
October 11, 2014 4:28 AM   Subscribe

1. Is there a silver lining in that I'll be finally paying off the debt at least? Will that help me in the long run? Or is the fact that it's a garnishment super verboten? 2. Is there any value in contacting the creditor?

I had a judgement against me that i failed to pay. Now a garnishment order has come through (and this just a week after seeing a credit counselor to start getting my financial house in order).

My questions:

1. Obviously having your wages garnished is not a good thing. But is there a silver lining in that I'll be finally paying off the debt at least? Will that help me in the long run? Or is the fact that it's a garnishment super verboten?

2. Is there any value in contacting the creditor? I don't have the money to pay it off in a lump sum but would like to make payment arrangements. But something tells me it's too late for that.

posted by anonymous to Work & Money (15 answers total)
It's unlikely that the creditor would opt for a voluntary payment (which hasn't worked in the past) in lieu of a court ordered garnishment. Contacting them would probably be an exercise in frustration and humiliation.

The damage has already been done in terms of your credit rating, there isn't much you can do about that now other than NOT make it worse with further defaults.

I do like that you're willing to see the positive.... You're finally working on this debt. Continue with the credit counseling. Best of luck... and hang in there...
posted by HuronBob at 5:17 AM on October 11, 2014 [1 favorite]

You're at the nadir of the situation. The good news, no place to go but up. So pay off the debt, and don't ever let any debt get to this point again. The sucky thing is that you'll probably pay the damn thing six-times over before you're done.

Oh well. Once it's paid off, after seven years it comes off your credit report.
posted by Ruthless Bunny at 5:57 AM on October 11, 2014 [1 favorite]

Not a lawyer, yadda, yadda. Assuming you didn't show up in court, I don't see why you couldn't get the order dismissed by letting the judge know you were improperly served which is why you didn't show up to fight it in court.

I don't see how talking to the creditors would help though. Have you asked your credit counselor about your options?
posted by Ik ben afgesneden at 6:00 AM on October 11, 2014 [1 favorite]

If you're able to pay it off in one lump sum, sure, contact them. But if you're just looking to remove the garnishment don't even bother. They've obviously exhausted all other ways of getting you to pay and they didn't work. They're not going to make different arrangements with you.

That being said. A garnishment isn't going to look better or worse than anything else at this point unless you're trying to buy a house. I'm assuming that's not the case.
posted by checkitnice at 6:05 AM on October 11, 2014 [2 favorites]

Since this will be on his/her credit report for seven years. Would bankruptcy be a worse or better option? I think that lasts seven years too, no?
posted by tunewell at 6:16 AM on October 11, 2014

We have also just started working with a credit counselor, and this is exactly the kind of thing you should call your counselor about. We've had several back-and-forths with our counselor as things have come up that we didn't think of in our initial conversation, and they've always known what to do. If by working with a credit counselor you mean one of those places that negotiates with your creditors for you, sets up new payments plans, and processes the payments for you, then if there is a call to be made to your creditor, it's likely that the credit counselor is the one to make it, and to work out a modification with them. If a modification isn't possible, then they're going to want to work this garnishment into your budget and plan with them.
posted by Incoherent Cockroach at 8:04 AM on October 11, 2014 [2 favorites]

Bankruptcy is WAY cheaper and will save you lots of $$.

There is zero benefit to paying a judgement. There will be no positive gain on your credit rating.

IANAL. You really should consider this, tho. A judgement is bad. It can't get any worse in terms of your credit rating.

You might as well simply seek bankruptcy protection. This is, like, EXACTLY what bankruptcy is for.

If you could have paid this debt sooner, you would have.

Bankruptcy. See a lawyer. Do it if their advice agrees.
posted by jbenben at 8:59 AM on October 11, 2014 [2 favorites]

What jbenben said. I don't know exactly how the bankruptcy would work with regards to the judgement, and that's what the lawyer is there to explain to you. Bankruptcy has its own credit damage but you're probably not going to be any worse off than you are now, and you get to restart with a clean slate. It very well may be the best of a batch of bad options.
posted by azpenguin at 10:40 AM on October 11, 2014

I suggest you speak to your credit counselor then to your employer. In my state they can fire people for garnishments, well for anything really. So you should speak to them asap and try to gauge if this is going to cause professional problems as well as the financial & legal mess. Good luck, I hope you can work this out.
posted by RichardHenryYarbo at 11:01 AM on October 11, 2014

Ok. I don't know how to respond anonymously so I'm just going to out myself here because I have a couple follow up questions.

I called a bankruptcy attorney and he advised against bankruptcy because of the following:
1. I gross about 58K a year.
2. All my negative debt (not including my car, for which I've never missed a payment), including this $2600 garnishment, totals less than $4,000.

He said my income is too high to justify doing bankruptcy on so little debt.

But my credit score is like 525. I don't see how it is so low on such little debt (or is it my lack of attention to it?).

So questions:
1. I'm guessing it's best to weather this garnishment since half my negative debt will be paid in the end. Is this correct thinking?
2. Can I expect my credit score to go up once this is taken care of and I start settling the rest of it? Or is a garnishment like a scorched Earth type situation? Am I down for a good long while now?
3. I have to find a new apartment in May of next year. How much difficulty should I expect?
Thanks so much guys for all your advice.
posted by tunewell at 11:02 AM on October 11, 2014

Absolutely do not declare bankruptcy on such a small amount of debt. That is a terrible terrible idea. Bankruptcy will not improve your credit score. Your lack of attention to your debt is what trashed your credit score, not the amount. My DH has been through all of this - it just takes time to bounce back.

As for the questions:

1. Keep the garnishment. Once it's paid, have the creditor file a 'satisfaction of judgment' with the court and KEEP A COPY. You will need this in the future. The court should, periodically, update these with the credit bureaus. Depending on the trustworthiness of the creditor you may even be able to pay them more to get it done quicker.

2. Your credit score will not go up significantly until you start to build positive credit. There are many ways to do this, but I'm not sure one way or another which is best.

3. This totally depends on your area.

Make sure that you're making regular payments on your other debt and get rid of it asap while you're at it. Good luck!
posted by checkitnice at 12:57 PM on October 11, 2014 [1 favorite]

"Assuming you didn't show up in court, I don't see why you couldn't get the order dismissed by letting the judge know you were improperly served which is why you didn't show up to fight it in court."

In most states, if not all, to set aside a default it has to be established that the defendant had a viable defense to the claim.

The reason that most collection filings result in a default is that the debtor knows he owes the money.

Even with the garnishment, if you have the means to pay a significant fraction of the judgment amount, it's worth contacting the attorney who filed the case to see if that can resolve it.
posted by yclipse at 1:05 PM on October 11, 2014

Your total debt is less than 7% of your yearly gross?

Yeah, just pay your debts. That's how you fix this situation. Stop defaulting on stuff.
posted by Justinian at 1:11 PM on October 11, 2014 [1 favorite]

I do the payroll at my company & am the person who receives and puts through garnishment orders. My understanding is that once a garnishment is ordered through the courts, you cannot negotiate a new payment plan with the creditor without going back to court to get the original order rescinded. Even if you paid in full right now, the order would still be in effect until the court weighs in.
posted by jenmakes at 7:49 PM on October 11, 2014 [3 favorites]

IANAL but I do work in this area; this is not legal advice.

In my state, the creditor generally gets fees and costs awarded for each garnishment order, so in addition to the interest, the principal of your judgment may be decreasing less than you think, or maybe even increasing despite these payments. I would absolutely contact the creditor. They may agree to a lower rate of payment, or even lower or no interest, in exchange for not having to deal with and pay for the garnishment orders. Since they might not trust you to continue making payments, you may be able to enter into a "voluntary wage assignment" (if your employer agrees) where your employer continues to withhold the money from your paychecks and sends it to the creditor directly. I would guess that a local credit union would be more likely to work with you on this, and a collection agency much less so. Regarding jenmakes' comment, in my state the creditor can cancel a garnishment order at any time. State law will also govern how long the garnishment lasts, and what fees and costs can be added by the creditor.
posted by Safiya at 10:51 AM on October 13, 2014

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