As of February 2015, U.S. outstanding consumer debt was at $3.34 trillion. Creditors, of course, expect regular payments from borrowers; however, sometimes wage garnishment is a necessary step for loans in default.
When a customer is in default for their loans or lines of credit, wage garnishment gives creditors a legal option for recouping consumer debts. The garnishment process in Arkansas is relatively straightforward and can help a business collect on defaulted debts by taking funds from the wages of the consumer to pay for their loans.
Garnishing Wages for Loans in Default
If your business has been unable to collect payment for credit card bills or related consumer debts or loans, you can file a lawsuit in an attempt to recoup your funds. If the court rules in favor of your business and you have a judgment, you can then use the wage garnishment process to collect a portion of your debtor’s wages every pay period until the debt is satisfied.
There must be a court ordered judgment in place to legally garnish wages. Once in place, wage garnishment runs until the debt is paid or until the garnishment is stopped by bankruptcy. Wage garnishment is usually considered a last resort after all other attempts to resolve a debt have failed.
With the help of a debt collection attorney to speed up the process, wage garnishment is an effective way to collect outstanding debts.
Limitations
While garnishment allows you to collect a portion of the defaulted consumer’s wages each pay period, there is a limit to the amount that can be collected. The figure is based on 25% of the worker’s disposable income.
The state of Arkansas is considered creditor friendly, and does not impose limitation upon the ability to garnish wages beyond the Federal protections a debtor already has.
Bankruptcy and Wage Garnishment
When a debtor files for bankruptcy protection, it can put an immediate halt to wage garnishment, either temporarily or permanently. Once a person being garnished files for bankruptcy protection, an automatic stay effectively stops all collection – including garnishment.
While you can ask for this stay to be lifted, you must provide a reason for doing so—beyond wanting payment. If the debt is discharged, then you can no longer garnish wages, creating a permanent end to garnishment.
Special Rules for Arkansas
Arkansas’s rules regarding wage garnishment are closely aligned with Federal standards. Arkansas is considered a creditor-friendly state, meaning garnishment orders are relatively easy to acquire with the help of a debt collection attorney. Once in place, the garnishment will require a court order or bankruptcy to remove.
If you have questions about garnishing wages for loans in default, contact the McHughes Law Firm at 501-376-9131 to speak with one of our experienced debt collection attorneys.
*Photo courtesy of TaxRebate.org.uk
