When I was a little kid, I used to listen to adults using financial terms and totally panic.
“How could I ever understand what these things mean?”
At the time I couldn’t even understand what a mortgage was but asecond mortgage?
This post originally appeared onReady For Zero.
I became totally convinced that adulthood must bereally hardif you have these kinds of complex terms dominating your vocabulary.
Being the anxious kid I was, I became angered that these things weren’t taught in school.
“How would I ever survive adulthood if I can’t learn this stuff?”
Today’s term:wage garnishment.
What Is Wage Garnishment?
Most garnishments are made by court order.
Pretty scary if you’re already just barely making ends meet!
So the question is, what types of default can lead to wage garnishment?
Here’s a generaltimeline:
1.
You miss a payment and maybe two or more.
Your lenders contact you to say that you’re past due.
If you’re inmedical debt default, your debt may get sold to a collection agency.
If you’re incar loan default, your lender may repossess your car.
If you’re instudent loan default, your loans could end up getting sold to a collection agency.
If they continue to go unpaid, your taxes could be withheld to recoup the defaulted amount.
Ultimately, unpaid tax debt can even send you to jail.
Unpaid tax debt has a multitude ofconsequencesso this is one to take very seriously.
once you nail a judgement against you, you are given a specified amount of time to respond.
If you do none of these things, you’re on the road to wage garnishment.
What If You’re Unemployed?
It also includes withholdings for employee retirement systems required by law.
If you earn more than that, any wages above $217.50 can be garnished.
Unfortunately, that law does not protect you after you’ve been garnished for two or more debt accounts.
Act Now if You’ve Defaulted on Your Debt
Defaulting on debt is scary.
Even one missed payment can set you on a path to feeling like you might never catch back up.
Don’t let this setback get you down no matter how far behind you are.
The truth is, no situation is totally hopeless.
And the sooner youtake action, the better your circumstances will be.
Photos byMauricio Balvanera,MorganandTulane Public Relations.
