Can You Afford to Ignore Credit Card Debt?

  • Credit Card Debt

Can You Afford to Ignore Credit Card Debt?

Anyone can fall into a bad financial situation anytime. During the time of financial uncertainty, it is at times difficult to make even essential payments, due to which many people come to rely on their credit cards, unaware of the fact that the dues they are accumulating so will be harder to shake off. Increasing credit card debt can cause debt collectors and creditors to come knocking on your doors and take steps to recover their dues including wage garnishment.

Los Angeles based law firm Recovery Law Group has been instrumental in providing legal assistance to many individuals struggling with financial issues, especially those involving bank account or wage garnishment by creditors. These actions can have a huge impact on an individual’s life and cause additional stress to an already tense individual. It is therefore important to take control of the situation by getting the best legal minds to stop any collection actions against you.

What Happens with Wage Garnishment?

Taking away wages from your workplace or bank account is one of the most threatening methods being employed by creditors and debt collectors for collecting their dues. Whenever an individual fails to honor their debt, debt collectors can initiate legal actions to receive their payment. If the creditors manage to get a court judgment against you, your wages or bank accounts can be seized. In states which allow wage garnishment, not more than 25% of your wages can be garnished by the creditors. It is also important to remember that some benefits as well as certain types of income like social security benefits cannot be taken away by creditors. Your bankruptcy attorney can guide you regarding what part of your income can be exempt from garnishment. During bank account garnishment, all funds except for those mentioned above can be seized. It should be kept in mind that the debtor has to prove, which funds from his account are exempted from seizure.

Ways to Avoid Garnishment

Negotiations with the creditors can go a long way to avoid any garnishment problems. Debt collectors usually resort to legal ways only when payments are long overdue. If you wish to avoid them suing you, you need to come up with a repayment or settlement plan. In case you have been sued already or are facing garnishment issues on your bank account, you need to consult your bankruptcy lawyer to weigh in your options, such as bankruptcy.

If you opt for bankruptcy, you can avail the automatic stay benefit, which is issued by the court when the bankruptcy petition is filed. With automatic stay in place, any order regarding collection actions against you such as repossession, garnishment, foreclosure or utility shutoffs is put on hold. This interim relief provides you with time to make adjustments in your finances for making monthly payments as per Chapter 13 repayment plan or for liquidating your assets as in Chapter 7. Simultaneously a process to get debts discharged is also initiated, thereby providing additional financial freedom and flexibility.

During both, Chapter 7 and Chapter 13 bankruptcies, credit card debt gets discharged after the process is complete. With that, you are no longer legally indebted to make payments towards such discharged debts, thereby making you free from any threat of wage or bank account garnishment. There are different strategies when it comes to deal with garnishments. However, as a layman, people are generally not aware as to which is the best suited one regarding their personal circumstances. It is therefore important to take the help of experienced bankruptcy lawyers to help you out with such problems.