Question about garnishments, and any recourse?

[shans]

Hi there! I'm a new user, and am hoping maybe someone here can help answer a question I can't find anything about online

I live in Colorado, and have a large debt from several years ago (original creditor was HSBC Bank).

Maybe 6 months ago, the collection agency handling the account currently sent me notification of a lawsuit - I did not answer with the court, as there was a page offering payment arrangements.

I tried to make TWO different payment arrangements, PRIOR to the 'court date', both of which were declined by HSBC. So, the court awarded a default judgement (it IS my debt - no sense in trying to fight it)

After the default judgement was awarded, the collection agency went IMMEDIATELY after the contents of my checking account, and cleaned it out And, over the last 2 months, I have been working with a representative of the CA to TRY to set up arrangements - but every offer I make has been DECLINED by HSBC.

On 10/30, the CA representative essentially told me that HSBC is refusing to allow me to make ANY arrangements, and will ONLY offer to 'settle' for 90%, which is over $3700 - I don't have that!!!!!!

She then recommended that I simply try to make direct payments, as sort of a 'good faith' gesture, but also made it clear there was no guarantee.

And then, on 11/13 (2 weeks later!!!), they moved forward with filing for wage garnishment, which I just learned of today.

The CA rep I've been working with is actually very compassionate, and has forwarded my case to a manager, in hopes that there may still be an option to set something up and prevent the garnishment.

But, my question is this: Is it actually LAWFUL for HSBC to flat out DENY me the right to make payments on this debt, and then turn around and garnish my wages???? It seems to me that this is WRONG!

I have never denied this debt, and have made MANY attempts to do the right thing (well documented by the CA rep as well) - how can this be OK?

I just wonder if I have any recourse at all. I realize this is MY problem, and NOT theirs, but I have 2 children to provide for, who's well-being (not to mention Christmas) is being threatened by this

Does anyone have any insight?

Thank you in advance!

[justbroke]

They have a judgment. The judgment is their claim reduced to a certain dollar value. They do not need to negotiate, be compassionate, or accept partial payments. The time to do that was back when it was in collections. Yes, the collection business is tough.

Having wrote that, there are protections (usually) for a head of household that is providing for children. You really need to get a consultation with an attorney (or several) which deal with judgments. In my State, Florida, they can't go after much of a Head of Household's income so wage attachment could be limited in a case like yours (in my State). I do not know how Colorado deals with this.

However, if you just sit around and try to work through this CA or negotiate with HSBC, you are probably working this incorrectly. You should have filed an answer to the garnishment and should have claimed that those were wages of a Head of Household (or whatever protections Colorado provides). So, I would be looking to not only declare your wages (and protecting as much as possible) but also your banking accounts. I do not know the process for Colorado. (I don't know it for Florida either, but I'm familiar with Florida.)

[GoingDown]

First do what JustBroke said above.

The laws vary by state, in Arizona for example, there is a threshold for wages that would have to be met before they could attach your wages, so if you earned very little, you could file a response in court indicating this, and your wages would be safe from garnishment.

Next, if Colorado laws don't offer the necessary protection for your wages as Head of Household, low income wage earner etc., then move on to the next step:

1. Is this the only debt you have? Or do you owe a significant amount of other debts?

2. Can you afford to lose 25% of your wages right now and for however long it takes to pay off the judgment?

If you answered yes to #1, then start the process of filing bankruptcy. Bankruptcy will end the wage garnishment and probably get rid of the rest of your debts.

If you answered no to #1, then $3700 is a rather small amount to be filing bankruptcy over.

But if you answered no to #2, then you should probably file bankruptcy anyways.

However, if you answered no to #1 and yes to #2, then I would just sit back and let them garnish away until the debt was paid off, and look for ways to thwart them from getting paid. For example, if you can find a way to become self-employed, now is the time to do it. If you don't mind temp jobs, now might be the time to do them, etc.

[bcohen]

The problem with letting them garnish you is that they will take 25% of your wages--and 100% of your bank account--thereby leaving you nothing to pay rent, utilities, buy food, etc. If the laws of your state allow for a hardship objection to garnishment, then I suggest you file the appropriate motion to contest the garnishment, or at least limit what the creditor can take. If not, then it sounds like it's time to file for bankruptcy.

[GoingDown]

The problem with letting them garnish you is that they will take 25% of your wages--and 100% of your bank account--thereby leaving you nothing to pay rent, utilities, buy food, etc. If the laws of your state allow for a hardship objection to garnishment, then I suggest you file the appropriate motion to contest the garnishment, or at least limit what the creditor can take. If not, then it sounds like it's time to file for bankruptcy.

There is, of course, a simple solution to that problem.

I think anyone who has read my posts probably already knows what I am going to say at this point.

If someone files a lawsuit against you, your money is no longer safe in a checking account or savings account at any bank I know of.

Your money is sadly safer as cash stuffed under your mattress than it is in a bank at that point.

The solution is simple: stop direct deposit from your employer and get paper checks instead. Then go to the local bank branch upon which the check is written, and stand in line and cash the checks. Then simply go back home with it and put it into a fire-safe container and put it in a secret area in your house. Use money orders and pre-paid debit cards to pay your bills. Use cash to buy everything else, at the store for example.

Then, close your checking and savings accounts.

If you do not have a checking account, nor a savings account, then there is no way for them to get at that money.

That's what I have done since Capial One sued me, and it has worked fine for me. I have found that I end up spending less money when I buy things with cash, so overall it has helped me.

Treehugger no longer seems to post on here, but he was someone who, rather than filing bankruptcy, he just let them garnish away, and just learned to live without the 25% of his income.



And, back to my original point: if there are no other debts for the original poster, then this is simply too small of an amount of debt to bother filing bankruptcy over. If this person is unable or unwilling to file it pro se, they might have to spend almost that amount to a bankruptcy attorney to file bankruptcy. And then they can't file again for a number of years. I see it as the nuclear option-- if all else fails, file bankruptcy. If I ended up with huge medical bills or some other big lawsuit came my way, I would want to preserve the nuclear option til the very end so I could use it to get out from under a mountain of debts.

Like I said earlier, on the other hand, if this person has other debts and obviously can't pay them, then going down the bankruptcy route is the right thing to do.