Would you lose your home to garnishment
Problem: Shawn owns the title of his home in California. He has defaulted on a credit card and is afraid that if the creditor wins a judgment against him, his house and personal property will be taken. He needs to know what exactly can happen and what he can do.
Solution: Shawn, let me begin by telling you how garnishment works. It begins with a court judgment mostly unless the debt is against a government agency or is related to child support. Once the judgment is placed, the creditor must appeal to the court to either garnish your wage or your bank account. However, there is a state limit to how much wage or money the creditor can garnish. Once the paperwork is filed, the employer of the debtor needs to be informed (in case of wage garnishment). It then becomes the employer’s duty to divert a certain amount of money from the employee’s paycheck to the court directly. The court collects the funds and mails the amount to the creditor in due time.
Sometimes it so happens that the creditor gets another court order stating that you need to appear for supplemental proceedings. This proceeding requires you to provide details about what assets you own, the wages you draw, your bank account details and details related to other property. Usually a creditor isn’t interested in garnishment unless you have something to be taken away to pay off the loan. In your case, Shawn, your creditor may put a lien on your house through the judgment that they have against you. This they will do when your wage garnishment still leaves out a certain portion of your debt as outstanding. If you cannot pay off the lien, you may have to lose the house to them.
Even if your creditor does not put a lien on your house and you plan to sell it off, the proceeds from the sale must first go to paying off the loan before you have any other plans with the money. You may seek help from California debt consolidation laws in paying up your debt.
Avoiding garnishment
If you can, then please do avoid a judgment because this can be damaging. Instead California debt consolidation can help you avoid a judgment if you can take help in time. You may seek a single unsecured loan with a low interest to pay off the money that you owe, if your score and circumstances allow you to. Else you can seek professional help from a debt consolidation firm to help you negotiate better with your creditor(s).
Another way to stop garnishment would be to file Bankruptcy. An ‘automatic stay’ freezes any action taken by your creditor against you. However, there are limitations to what the ‘automatic stay’ can and cannot prevent.
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