Debt can never be regarded as a good thing though some is more positive than others. The real estate market would not be what it is today without mortgages that are an excellent way for families to build up their assets. Likewise personal realistic loans are a very positive strategy for paying off more expensive debt such as that on credit cards that have become such temptation in the modern world. It is important to avoid owing money to the wrong people because there can be consequences. In some circumstances, you may find that creditors can actually legally demand money directly from your wages. It is taken before you get any access.
With so many families living from one pay check to the next, it is inevitable that many will miss scheduled payments. Those who fall 9 months behind are regarded as being in default and when that happens there are consequences:
1) Those seeking further assistance will find that it will be denied.
2) You may have up to 10% of your income withheld for payment against the debt.
3) Your credit score will be damaged.
4) There may be tax refunds withheld while you remain in default.
If you are in difficulties, it is essential that you keep in communication with all creditors incidentally.
The Inland Revenue Service does not need a court order to take wages directly from your employer. If you owe tax, it only needs to send a notice of wage garnishment to your employer who must act on that notice.
While you will find that a fixed percentage of your monthly salary will be taken, you may lose any bonuses and commissions completely as the IRS seeks to recover the debt.
Child Support and Alimony
If you have obligations to a wife and children, a court order can be obtained to authorize deductions from your monthly pay check. There are limits to what can be taken of course. It is a percentage of disposable earnings but in any event it may well hit you hard so you should endeavor not to get yourself in trouble.
Private creditors can obtain a court order though in practice it is better for both sides if the resolution of a sum of debt is agreed out of court. Some creditors will inevitably be more aggressive than others. It is stressful to be in debt with telephone calls and letters seemingly a daily occurrence. The main thing for you to do is to keep communication lines open because ignoring a problem in the hope that it will go away is foolish.
An Act in 1996, the Debt Collection Improvement Act states that collection and federal agencies can obtain up to 15% of your disposable income direct from your employer if the case is proven.
Private creditors are also able to sue under this Act and can win up to 25% of your disposable income. The possibility of hardship will be taken into consideration.
It is possible that creditors will seek to obtain some of your existing assets to settle the debt. That varies from State to State within the USA.
The whole subject of debt and garnishment is disturbing to say the least, and certainly stressful. There are many things that will happen before the resort of garnishment is reached whether by federal authorities or private creditors. It can be difficult to get out of debt and it is important to keep talking, as well as looking for solutions to the problem.
There is plenty of help and advice available to you and it is essential that you forget any embarrassment at your predicament and imagine the time when your problems are resolved and you can look to the future. That day will come if you are determined and follow all the advice you are given.