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Collection of delinquent debt by collection agencies is on the rise.  What steps will they take to collect from you?

As you are aware, defaults on credit card accounts are at an all time high. The number of delinquent or defaulted credit accounts continues to rise at an alarming rate. This makes collection of delinquent debt a big business.

What often happens after a default is that the original creditor makes a few attempts to collect. This may come in the form of a letter or two, and a phone call or two. If the account is not satisfied at that time, it is turned over to collections. Most likely, the account is sold for a fraction of the amount allegedly due and owing, often times mere pennies on the dollar.

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Have you been threatened with Wage Garnishment?  Can they actually garnish your wages?

So you have defaulted on a credit account. The debt collector calls and demands immediate payment of the debt. The debt collector then makes the following threat: “If you do not pay this debt by Monday at noon, we will garnish your wages, starting with your next paycheck”.

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A collection agency may not garnish your wages without following the bounds of due process.

From what my clients have told me, this threat occurs with great frequency. The typical scenario is that the individual has defaulted on a credit account. The original creditor, be it Citibank or Capital One or whomever, fails in its attempts to get the defaulting individual to pay. The individual’s debt is now referred to as “bad debt”. Many times, the original creditor will simply give up and sell the “bad debt” to an outside company, such as a collection agency, for pennies on the dollar, sometimes even less.

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