Many people begin to consider filing for bankruptcy when they have no ability to repay debts, and no other way to stop the incessant telephone calls and collection efforts of creditors.
Some people, however, consider simply ignoring the creditors, shutting off the telephone ringer, and pretending there is no problem.
Avoiding creditors not only doesn’t make them go away, it doesn’t solve the problem and could hurt your finances severely.
Bankruptcy is an alternative that allows a person a court-approved method of repayment or discharge of debt. A debtor either makes reasonable payments over a period of time, has debt erased, or a combination of both.
Bankruptcy requires that creditors comply with the court-ordered plan. With a plan in place, or court orders discharging debt, creditors are no longer legally permitted to even attempt to collect debt.
You should consider whether bankruptcy is right for you. Never simply ignore creditors.
Unexpected Garnishment Without Bankruptcy
Without a court-ordered repayment plan or some other alternative, there is nothing stopping creditors from garnishing your wages, if you have them, or even your money kept in a financial institution, such as a bank.
If someone who owes a debt to a creditor has funds at a financial institution, the creditor may serve a Garnishment Summons and Disclosure Form upon the financial institution along with other notices.
The financial institution must retain as much of the amount owed as the financial institution has on deposit owing to the debtor, but not more than 110% of the creditor’s claim.
The creditor will mail to the debtor a copy of the Garnishment Summons and anything else that the creditor served on the debtor’s bank, including notices.
The debtor has 14 days to notify the financial institution and the creditor of any claim for exempt property he or she wishes to assert. If the financial institution does not receive any such notification within 14 days, the debtor’s funds at the financial institution remain subject to garnishment.
Address the Problem Head-On
Clearly, ignoring creditors is not the best way to address financial problems.
Even if you do not qualify for discharge of debt in a bankruptcy proceeding, a reasonable repayment plan, generally over three to five years, may be obtained.
This is a much better resolution than garnishment.
As you can see, it is not difficult for a creditor to obtain a garnishment of your bank account. Garnishment may arise quickly and complete destroy the plans you have for your money, which may include debt repayment or feeding your family.
Be sure to explore the option of bankruptcy, and any other options you have – but do not simply ignore creditors and hope they will go away. Ignoring creditors is a dangerous and unsuccessful tactic.