How Aggressive Can Creditors Get When Collecting Debts?

I am astonished at how many times I hear a client ask me, "Am I going to go to jail if I don't pay my bills?" Laws allowing for the arrest of someone for an unpaid debt are not new. It's not a crime to owe money, and debtors' prisons were abolished in the United States in 1833 but before then, the use of debtor's prisons was widespread. The Debtors' Prison in Accomac, Virginia is an example of one of the last structures surviving from a complex which initially included both a jail and a jail yard. Constructed in 1783 as a house for the County jailer, it was converted to use as a debtors' prison from 1824 to 1849 (Virginia Historic Landmarks Commission staff (June, 1976).

Surprisingly, in some states, arrest warrants generally can be issued if a borrower is in contempt of court, i.e. a debtor who fails to appear in court can be held in contempt and an arrest warrant can be issued if a collector seeks one. Arrested debtors aren't officially charged with a crime, but their cases are sometimes heard in the same courtroom as drug users. According to court filings, retailers, credit-card issuers, landlords and debt collectors are the most frequent seekers of such orders. In Minnesota, for example, people are routinely being thrown in jail for failing to pay debts. Minnesota has some of the most creditor-friendly laws in the country yet the use of arrest warrants against debtors has jumped 60 percent over the past four years.

In California, a creditor can initiate a wage garnishment to have your employer withhold money from your paycheck as payment towards the judgment. To begin the process, the creditor must first obtain a Writ of Execution which is a certification of the amount owed, and an Earnings Withholding Order. The Writ of Execution and Earnings Withholding Order is sent to the levying officer. In most counties in California the Sheriff is the levying officer. An Earnings Withholding Order (wage garnishment) requires an employer to withhold up to 25% of the debtor's disposable earnings (net income) to the sheriff or levying officer for payment to the creditor. (The withholding amount is 50% if the writ is for spousal or child support).

The Earnings Withholding Order remains in effect for 10 years or indefinitely (if for support) until the judgment is paid, the debtor ceases to work for that employer, a higher priority Earnings Withholding Order takes effect (such as an Earnings Withholding Order for child support) or the Order is terminated by operation of law.

The Sheriff's responsibilities are limited to serving the earnings withholding order and receiving and disbursing collected monies. The Sheriff cannot call or otherwise attempt to compel an employer to comply with the wage garnishment. However, Code of Civil Procedure Section 708.210 et seq. allows the creditor to sue the employer for failing to comply with a wage garnishment order.

If you are being sued, if you already have a Judgment that was obtained against you for a debt, or if a creditor is trying to enforce a Judgment through a wage garnishment - do not ignore it and do not bury your head in the sand. Reach out for help before the financial hole gets too deep. Judgments and garnishments can often be avoided through bankruptcy if the problem is addressed early on.