If you allow any of your debt accounts to slip into delinquency, your creditors are likely to come after you for repayment by any legal means necessary. If your creditors can prove to a court that your debt is valid, they are likely to win the court's support in their pursuit of your assets. However, the court does provide some level of protection for delinquent debtors in terms of what assets a creditor may pursue.
Attachable assets are those that creditors can seize from you in the event of your non-payment. Literally, they are assets registered in your name to which a judge can "attach" a writ or order of attachment. These include property and non-retirement-related bank accounts.Generally, the more attachable assets you have, the more likely your creditors are to sue you for repayment.
Before a creditor can come after any of your assets, it must file a lawsuit. If the creditor wins the lawsuit, the court will award a judgment, which essentially grants the creditor permission to pursue your assets. You are free to negotiate a settlement with a creditor either before or after a judgment, but if you have assets of significant value your creditor is more likely to pursue liquidation of your property in search of full payment.
Enforcement of a judgment is often carried out by your local sheriff. If you make a substantial income, a judgment creditor can request a garnishment of your wages, and your employer must comply. If you have substantial net worth tied up in property, a judgment creditor can put a lien against your property, preventing you from selling it until you satisfy your debts. In some cases, a judgment creditor can levy your bank account, taking out the money you owe.
If a creditor wins a lawsuit against you and begins active collections, some of your assets are non-exempt no matter how much money you owe. The amount of protection you are afforded can vary from state to state. For example, in New York creditors cannot take the last $1,740 in your bank account, or the last $2,625 if the source of that money was exempt benefits, such as Social Security or unemployment benefits. Federal regulations limit wage garnishment to the lesser of 25 percent of your weekly earnings or 30 times the current minimum wage. That level can be raised to 50 percent or more in the case of child support payments. Retirement benefits such as pension payments and 401(k) balances also are exempt.
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