Dear To Her Credit,

We defaulted on a car lease with Chrysler and they sued us for the balance of the lease after they repossessed and sold the car. We took it all the way to court as we had several problems with the car while we had it, but the judge ruled we violated the lease.

We now have a judgment against us for $4,000. We had a payment arrangement of $150 per month for six months and then they wanted us to increase it to $300 per month. I agreed to the $150 and said we could see what our budget would allow after the six months.

The six months is now up. I continued to send a check for the $150, as there is no way I can afford $300. My question is: As long as I am making the $150 payments faithfully, can they garnish my wages? I am a part-time employee and work with money. I fear that if they garnish my wages I will lose my job. Thank you. 

- Sandy

Dear Sandy,

You can stop worrying about losing your job if the leasing company garnishes your wages, as long as this is the first time it's happened to you.

In the past, employers sometimes fired employees rather than go through the hassle of complying with garnishment paperwork and sending part of each paycheck to an employee's creditor. No doubt another reason they let people go was that employers get concerned when it looks like an employee may not be handling their personal finances well. In the worst-case scenarios, an employee under extreme financial stress may succumb to temptation and embezzle from an employer.

The good news is that according to the U.S. Department of Labor, your employer cannot fire you just because you have your wages garnished the first time. (Employers are allowed to fire people the second time they are required to garnish their wages.)

Wage garnishment is still something that should be avoided when at all possible, however. Having money taken out of your pay is somewhat embarrassing (although more common than you think), and you lose partial control of your money. The related delinquencies will show up on your credit report for years.

Unfortunately, making a payment that is less than the amount stipulated does not protect you from legal action on an unpaid debt. See "Paying less than minimum won't ward off garnishment."

The possibility of being stuck in a lease with a bum car, as happened to you, is one reason I'm not crazy about car leasing. Although all states have "lemon laws" to protect consumers who buy cars that turn out to have serious defects, some states do not extend those same protections to consumers who lease their cars. Basically, the same problem must persist after being repaired three or more times, and the defect must affect the use, value or safety of the car. The problem must be reported within a certain time frame or number of miles on the car.

Other problems with a car may still entitle a person to relief under their lease agreement. It doesn't seem to have helped in your case. Unhappily, what seems reasonable is not always how it looks to a court. Assuming you had good legal counsel, your case probably did not fit the circumstances for relief under your state's laws.

At this point, there's only one way to keep the leasing company from taking legal action and garnishing your wages or placing a lien on any property you own. You must communicate with them and convince them that the best course of action for them is to work with you and to let you make realistic payments until the debt is paid off.

You work part time, so $150 may be all they would get even if they garnished your wages. Don't let the leasing company pressure you into promising more than you can pay while still keeping up with your living expenses and your other financial obligations. If they take more than you can really afford, something else will have to give. This one debt can cause a domino effect with your other creditors if you're not careful.

If you need help sorting out your situation, I recommend working with a nonprofit agency affiliated with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

Keep talking to the leasing company, but stand firm on what you can afford to pay. If you come to an agreement you can live with, make sure it is in writing and then follow the terms of the agreement to the letter. That's the best way to take care of your credit and to put this behind you as soon as you can.