Dear Bankruptcy Adviser,
I got a letter from an attorney saying he has a judgment against me from 2007. The debt is from a credit card that I could not pay. Can my wages be garnished right away or does he have to go back to court again because the judgment is so old?
Your wages, your bank account and even your property are at risk right now. This judgment is still valid and the attorney can act on it. Not only is it valid, but the balance has been going up at a fixed interest rate per year since 2007. In California, the judgment rate of interest is 10%. The interest rate could vary from state to state.
The attorney does need a court order to garnish your wages. That would require a bit of time, but not much. If this is an experienced collection attorney, he could have that order in less than 45 days. Your employer could begin garnishing wages in less than two months from the date of this letter.
This type of judgment is good for 10 years from the date the court originally signed the order. At the end of the 10-year period, the creditor can renew the judgment through a very simple process for another 10 years, and so on. You could have this judgment follow you for decades.
You have a little bit of room to negotiate because in most cases, the creditor's attorney would rather be paid a lump-sum amount to settle the case rather than receive monthly payments from your paycheck. He or she knows that while an employer can't fire you for having this garnishment, the employer could find other convenient reasons to dismiss you once the garnishment begins.
Employers don't like employees in financial distress. They are distracted and, some people believe, are more inclined to take shortcuts because of their financial issues. Law enforcement is particularly averse to hiring someone in financial distress because the employee dealing with financial issues is more likely to take bribes in order to resolve their problems.
You have a couple of options. The best one for your credit is to pay the debt. If eligible, you can file bankruptcy to eliminate the judgment and balance. Or you can also try to settle the account with a lump-sum payment or short-term repayment of a settlement.
However, the process you currently have taken -- head in the sand, hope it goes away -- has finally caught up with you. Don't wait any longer.
Ask the adviser
Copyright 2014, Bankrate Inc.