Does it violate the FDCPA for a collector to threaten you with garnishment without a judgment?
A debt collector calls you and threatens you with wage garnishment if you don’t pay them.
There’s been no lawsuit, no judgment against you.
They just make the threat.
Is this legal?
I’ve been suing debt collectors for the last 25 years.
About 15 years ago, this was something that happened pretty frequently.
A debt collector would call a consumer about an old credit card debt.
The consumer would tell the collector that they are unable to pay right now.
Then the debt collector would threaten to call HR or the payroll department where the consumer works to get their wages garnished.
This is a very scary threat because, in Alabama, a garnishment can take up 25% of your income.
The threat often works for the debt collectors and that’s why they do it.
This is incredibly illegal under the Fair Debt Collection Practices Act (FDCPA).
This is assuming that the FDCPA applies to your loan – there are a few exceptions specific to federal loans such as student loans or small business administration loans.
Even with these federal loans, they have to go through an administrative process where you are notified of your right to challenge it.
For the majority of loans, if they threaten wage garnishment and they do not have a judgment against you, this is a huge problem.
This applies to many types of loans, including credit cards, car loans, personal loans, title loans, payday loans, etc.
If they say “I am going to garnish your wages” they better have a judgment when they make that statement.
To receive a judgment, they have to beat you in court.
This also includes a default judgment, which means they filed suit against you, you did not respond, so by default, they receive a judgment against you.
When they file a lawsuit, they have to serve you, win, and receive a judgment. Only then can they garnish your wages.
If a debt collector says that if you don’t pay them now they will sue you, serve you, get a judgment, and then garnish your wages, this is a fair statement assuming they are willing to file suit.
However, if you are speaking with a debt collector, particularly a place that does not even own the debt or claim to own the debt, and they say they are going to start garnishing your wages on Friday if you do not pay immediately – this is a problem.
There will definitely be some transfer of money, just not the way they had intended.
They will end up paying you because they broke the law.
If you are dealing with a similar situation pay close attention to what’s going on.
What exactly did they say?
Take notes. Record the call if legal in your state.
Then you can do this on your own or get with a lawyer that does this type of work.
Look up the court records to see if there is a lawsuit against you.
Does it say you were served?
Is there actually a judgment against you?
If there is no judgment and the debt collector threatened you with garnishment, you may have a very good case for suing that debt collector.
If you sue the debt collector and they pay you money then turn around and do the same thing again? Sue them again.
Hold these guys accountable when they break the law.
We hope this is helpful to you!
If you live in Alabama and you have any questions, feel free to get in touch with us.
We would be glad to help you in any way we can.
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Have a great day!