If a credit card company decides to pursue you for a debt, it must follow debt collection laws either in your state, the company’s state of incorporation or the state in which it is headquartered. As such, post-judgment procedure will also be governed by that state’s laws as well. Generally, a creditor can enforce its judgment one of several ways, but must make certain to adhere to applicable statute of limitation laws. If you are facing a possible judgment from a credit card company, there may be ways to protect you from judgment, including a negotiated settlement agreement or payment plan. Otherwise, the creditor will have all avenues available under state law to collect a debt from you.
One way for a credit card company to collect its judgment is by garnishing your wages, a remedy that is not available in every state. The creditor will obtain a court order permitting wage garnishment, which it will then forward to your employer. Under federal law, your employer is required to honor the order and withhold the proper amount from your check each pay period. Federal law also limits the amount a creditor can garnish up to 25 percent of your disposable earnings.
Another way for a creditor to collect from you is to arrange for a lien to be placed on your personal or real property. A lien is an interest in the property for a certain dollar amount that must be paid before the owner can receive proceeds from the sale of the property. Creditors can place liens on homes, boats or automobiles for the amount of the outstanding debt. With a lien in place, you would be unable to collect the proceeds from a sale of these items without first satisfying the judgment amount.
Writ of Execution
If a credit card company chooses, it can expedite the execution of a lien by obtaining a writ of execution (or similar order in your jurisdiction) from a judge directing the sheriff to sell the property and forward the proceeds to the creditor in an amount to satisfy the debt. Certain property may be exempt from a writ of execution, such as a homestead, a personal property allowance or government benefits. Creditors may prefer a writ of execution as it does not require waiting for the debtor to sell real or personal property before the judgment is satisfied.
A levy is similar to a lien in that it involves a court order directing the sheriff to collect some of your personal property for sale. This usually includes big-ticket items, such as automobiles or electronics. A credit card company can also levy your bank accounts in some jurisdictions, which is basically a seizure of the account to satisfy your debt. Known as bank levies, this is a popular method for creditors in certain states as it does not involve the uncertainty or procedural hassle of a sheriff’s sale or public auction.
- U.S. Department of Labor: Wages and Hours Worked -- Wage Garnishment
- Indiana Code: Remedies and Penalties -- Garnishment
- Scott M. Ellerby: Thoughts and Tips on Executing Judgments Against Real Property
- Utah Courts: Writ of Execution
- Arkansas Legal Services Partnership: Property Exempt From Execution
Stephanie Reid has been writing professionally since 2007, with work published in the Virginia Bar Association's "Family Law Quarterly" and the "Whittier Journal of Child and Family Advocacy." She received her Juris Doctor from Regent University and her Bachelor of Arts in French and child development from Florida State University. Reid is admitted to practice law in Delaware and Maryland.