Todd Ossenfort has been chief operating officer for Pioneer Credit Counseling since 1998. He writes our weekly “The Credit Guy” column, answering reader questions about credit counseling and debt issues.
Dear Credit Guy,
The credit card people sent garnishment papers to my work, and within two days, they took money out of our checking account and left us with $13. My husband is talking to a lawyer about possibly — or probably — filing for bankruptcy. Can they just keep taking money out of our checking account without us knowing? I have 10 days to send in the paperwork for garnishment, but I didn’t know that they would take money out of our checking account. My husband has been looking for a job for the past four months, so I am the sole breadwinner for the family, and we have two children, too. He does, however, get disability once a month to pay for an injury while he was overseas. (He is retired from the Army after 21 years.) Please advise. — Laura
Your credit card company could only send garnishment orders to your employer and your bank if the company had been granted a judgment from a court for money owed to them by you. You should have received information from your credit card company or other debt collector explaining that it filed a suit to collect what is owed them, along with the court date to appear or date to submit a response. The valuable lesson to be learned here is this: No matter how dire the circumstances, you always need to respond to court documents. By not responding, things tend to escalate from bad to worse.
The garnishment papers sent to your employer, and the money siezed from your checking account, are two separate issues.
First, let me address the money taken from your checking account. In order for money to be removed from your checking account, your bank would have to be presented with an order from a court that includes your personal information, your account number and the amount of the debt for which the order to levy your account was granted. It is quite likely that the amount taken from your checking account did not completely satisfy the total amount that you owe.
If the garnishment order sent to your employer is from the same creditor as the order sent to your bank, it could be that they were both granted from the court to collect the debt owed. In order to remove additional money from your checking account, the creditor would need to get another order from the court. It is possible that the creditor will simply collect the remainder of what is owed using the garnishment order sent to your employer. What this means to you is that you can expect your employer to withhold up to 25 percent of your “disposable earnings” –defined by the federal government as the amount of earnings after federal, state and local taxes, Social Security, unemployment insurance and state employee retirement systems have been deducted.
I would recommend that you follow the advice of the bankruptcy attorney with whom your husband is meeting. If you do decide that filing for bankruptcy is the best option for you, once the suit is filed, the garnishment order will be removed and all other collection activity will cease. In the meantime, you may want to avoid depositing any additional funds into your checking account until you know for sure if the account will be levied again or until your bankruptcy case has been filed.
Take care of your credit!
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