I cannot recall with any clarity the number of times that a client has inquired as to filing a Chapter 7 or Chapter 13 bankruptcy and has told me a creditor just called and threatened to garnish their wages if they do not make a payment of “X amount of dollars” by “this Friday.” Such threats leave a person desperate and in panic. In a such a state of mind you can easily make mistakes in judgment, especially if you live paycheck to paycheck. Many collection activities are governed by a federal statute that requires a collection agent to comply with certain restrictions. To find out about your rights against collection agencies, visit http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm and review the Far Debt Collection Practices Act for more information. The more you know, the less likely it is you will be taken advantage of.
In Arizona, a creditor for a debt, such as a credit card or bank loan, cannot garnish at will. They must first obtain a judgment from a court of law. Before they can get the necessary judgment, the creditor must first file a complaint and personally serve that complaint on the debtor (unless the debtor is avoiding service of process, in which case the creditor can publish the complaint with court authorization). You, as the defendant, or debtor, having been served the complaint, are given a certain amount of time to file an answer. In Arizona, you usually have 20 days to file your answer (plus 3 days for mailing) from the date of service of the complaint. If no answer is filed, the creditor must then file an application with the court for a default judgment. That will give you an additional 10 BUSINESS days to file an answer. If still no answer is filed, then the court can enter a judgment against you. If the creditor knows where you work, then the creditor can file for a Writ of Garnishment for earnings and after 10 business days, your paycheck can be
garnished. At a minimum that gives you 33 days after service of process to file an answer to avoid a judgment and an additional 10 business days before you can be garnished – a far cry from “this Friday.” If the creditor does not know where you work, or if you are individually self-employed (you cannot be forced to garnish yourself, if you are working and earning money as through a corporate entity, that is a different analysis), they can still garnish a bank account, so be careful.
The point of all this is not to make you an expert in civil procedure, but to let you know that you have time to make a proper decision. Creditors do not want you to think you have that time, thus the threat of garnishment is used in order to force you to make a hasty decision. Please do not fall prey to such tactics. The creditor’s goal is to get paid. Your goal is to provide for yourself and/or yourself and your family. Many times those goals are at odds and you need someone to help you make the right decision. Even if a creditor has filed a complaint, has a judgment against you, or even is garnishing you, it is never too late to take control of the situation, and many times a filing a bankruptcy will offer you the opportunity to take that control out of the hands of your creditors.