Garnishment is a legal process used to collect an unpaid debt. This process lets the Creditor take up to 25% of your paycheck every pay period. A garnishment usually requires a "Judgment" from a Court. However, the IRS can garnish your wages without any Court Order.

A Creditor can garnish your wages six times. The Creditor can then come back and garnish your wages another six times, and so on, until the entire debt is paid off. Only one Creditor can garnish you at a time. Keep reading - there is more information about the collection process on this page.

A lien is another type of legal process that can be used to collect an unpaid debt. Your real estate can become tied up by a lien when a Creditor obtains a Court judgment and files it with the County Recorder's office. Some Creditors can put a lien on your real estate without obtaining a Court judgment. This would include the IRS, the County taxing authority, your Home Owners Association, a public hospital, and a contractor who has performed work on the real estate. A lien can affect up all real estate titled in your name. A lien can also affect title to other types of property, such as a mobile home. To remove a lien, you typically must make full payment (plus all interest accumulated since the lien was filed) when the property is sold or refinanced.

A lien stays in effect up to ten years, or until it is paid off. A lien can be re-recorded and renewed indefinitely.

An attachment is a legal process used to collect an unpaid debt by taking money out of your bank account. An attachment usually requires a Court Judgment, except, of course, for the IRS, which never needs to have a Judgment. If you owe your bank, your bank may be able to attach your account without a Judgment.

You bank accounts can be attached until the "Judgment" amount is paid off. See more information below.

To be able to garnish wages, obtain a lien, or attach a bank account, most types of Creditors must file a lawsuit in Court, deliver a copy of the Court paperwork to the last or best address they have for you, and give you time (usually three weeks) to respond in writing to the Court. Many times, you may never actually see the Court papers because it was delivered to an old address. Or you may have assumed that if you didn't sign for it, the suit wouldn't go through, so you ignored it. You may have assumed that if you made a small partial payment, the Creditor won't be able to garnish you, but this is not true! Beware of false assumptions!

Once the deadline to respond has passed, a Judge signs a "Judgment," and this Court Order gives the Creditor the legal right to take up to 25% of your paycheck every pay period until the Judgment is paid off (called Garnishment), record a lien against your home (which will require full payment of the judgment when the property is sold or refinanced), or take money out of your bank account (called Attachment).

The Judgment also gives the Creditor the right to force you to testify about where you work and what property you own in order to help the Creditor collect the money from you. You cannot “take the Fifth” and refuse to testify, because the Fifth Amendment only applies to criminal, not civil matters!

Most people do not realize that a Judgment involves paying more than just the original amount owed. Attorney fees, court fees, and interest are added to the original debt, and any money received is applied first to those costs before paying down the principal balance of the debt. These extra costs can be larger than the debt itself.

In Bankruptcy, the federal court issues an Order to prevent the Creditor from continuing to try to collect money from you for your debts. This Court Order is considered superior to the Judgment. It stops any garnishment and prevents future attachment of your bank account. Once the Bankruptcy Court issues a “Discharge,” the debt can never be collected. The garnishment and attachment are gone forever.

When a judgment is recorded, it creates a lien which affects real estate and title to a mobile hom. Just filing Bankruptcy does not remove the lien because the Creditor does not have to take any action to collect money from you. Unless you do something about it, it stays on the records, affecting the title to your property. You can bring a separate action in Bankruptcy to remove any lien and clear up the title to your real estate. Additional work is involved for this, and there is an additional legal fee for this service. But some kinds of liens cannot be removed through Bankruptcy, such as Tax liens, Home Owners Association Liens, and liens by a public hospital.

Some debts, such as child support, student loans, and criminal restitution orders are not eligible for Discharge through Bankruptcy. As a result, Bankruptcy will not prevent the future collection of these kinds of debts.