Most people do not start accumulating debt with the intention of having it take over their lives. What started out as one credit card to help improve your credit, for example, may have turned into five credit cards all maxed at their limits.
If you find yourself unable to make ends meet and satisfy your minimum payments, you may have questions regarding the rights of creditors to recoup what you owe them.
According to FindLaw experts, creditors can have a portion of your wages removed from your paycheck and sent to them directly. Fortunately, creditors must send you notice of this beforehand. If you are unable to pay your minimum payment for a period, you will likely receive a notification that your creditor is filing a lawsuit to garnish your wages.
Creditors may take up to 25% of your net pay to satisfy your debts to them. For some people, this may be easier to budge because the garnishment removes money directly from their checks. Chances are, however, that if you could afford to pay your creditors you already would have.
Wage garnishments do not consider how much your rent or other expenses may be. This means that in some cases, wage garnishment will cause people to lose their homes or become evicted. In these instances, bankruptcy is probably a better option.
Filing for bankruptcy stops almost all kinds of creditor lawsuits and attempts to garnish your wages. Additionally, most states have homestead laws that allow you to keep your primary residence.