unsecured debt

Hi Worried mom,

Yes, your assets can be garnished by a creditor in case of delinquency. If the creditor gets a judgment against you, then he can garnish your property. However, you can stop garnishment by filing for either a chapter 7 or a chapter 13 bankruptcy. Under chapter 13 bankruptcy, you can repay the debt within 3-5 years through a repayment plan. I think this should be a good way to stop garnishment.

Justin, I always thought garnishments were only to banking accounts. Is this what they call a sherriffs sale? I only thought electric companies and such could sale off your belongings.

Hi Fireyone,

No, this is not equal to Sherrif's sale. Sherrif's sale is related to foreclosure. I am sorry that my reply has led to misinterpretation. I shall try and clarify it now. A creditor can garnish assets as in bank account, vehicles and wages in case a debtor is delinquent. But a creditor, after getting a judgment against a failed debtor can take away his/her home, in case that is the last resort to pay off the debt.

To be able to stop the creditor from taking away the debtor's home, he can file bankruptcy. Under chapter 7 bankruptcy, the property will be sold off to pay the debt. Under chapter 13, the debtor will get a chance to repay the loan through a payment plan with the consent of both the parties. This is done under the supervision of the court.

I hope that I have provided a clear answer now.

Hi worried mom

Let me tell you how garnishment works. Garnishment occurs when a creditor goes to court and wins a judgment against you because you stopped paying on a loan. This judgment contains all details of what you owe and the interest rate you need to pay on the unpaid loan.

Next the creditor may get an order from the court to take away your property. However, before he can garnish anything - your wage or property, he needs to send you a legal notice mentioning about the garnishment. This notice must include information of:

• the garnishment
• Exemptions from garnishment
• Your chance to contest the garnishment

Once your creditor starts with the wage garnishment, he can also take away your property, mostly your house and your car. He may put a lien on your house and if you can't pay it, will take away your house along with its belongings depending on the amount of outstanding loan. However, if you want your creditor to not touch your kid's property, you will have to speak with him regarding that.