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With the economy still creeping along on its belly, many Americans are facing mounting piles of debt. And for an increasing number of people — whether through mismanagement of their finances, loss of income or change in employment status — creditors are moving to garnish their wages to recoup their money.<\/p>\n
Before a creditor, including the government, can begin taking their pound of flesh straight from your paycheck every week, they almost always need to file a lawsuit. But many people never appear in court to defend themselves because they assume they’re going to lose and the worst that can happen is they still owe the money.<\/p>\n
However, this often only makes the situation much worse as the creditors will not only begin to garnish your pay — up to 25% of your take-home income — but will tack on near-usurious interest rates and penalties. <\/p>\n
And before you think “I’ll just declare bankruptcy,” you need to know that it often costs thousands of dollars to officially be declared broke.<\/p>\n
Says the NY Times, it’s always in your best interest to face your creditors in court:<\/p>\n
In the rare event that a consumer battles back, creditors frequently lack the documentation to prove their claim, and cases are dropped. That is because many past-due debts are owned not by the banks that issued them, but by debt collectors who bought, for cents on the dollar, a list of names and amounts due. <\/p><\/blockquote>\n
So if you find yourself penned into a corner and your creditors are unwilling to work out a reasonable payment schedule, try to find a reasonably priced attorney (the money you spend on the lawyer will likely be less than the penalties incurred by losing a lawsuit) and get your day in court.<\/p>\n