Judgment collection in Banks is one method of collecting a debt.
If an individual owes a debt, they may face a judgment collection in Banks. To get to that point, the creditor must first obtain a judgment. A judgment is basically when a court declares there is a legal debt the debtor must pay. But a court order will usually provide little motivation for a debtor to pay up. After all, by this point in the debt collection process, there are a lot of letters, notices and telephone calls to which the debtor did not respond.
But after a creditor gets a judgment, there are a few other tools to collect the money owed. Let’s look at a few of them:
Also known as a wage attachment, wage garnishment occurs when part of a debtor’s paycheck goes to paying back the debt. After setting up a wage garnishment with the debtor’s employer, the employer will deduct a certain percentage each pay period and forward the money to the judgment creditor.
The exact amount the employer can take out of each paycheck depends on specific state laws, which restrict how much a judgment can take out from each paycheck. Two exceptions to these state law restrictions usually involve the IRS collecting federal back taxes and child support obligations. In both situations, debtors may lose 50 percent or more of their paycheck to garnishment.
Setoff occurs when the bank takes money directly out of an account holder’s account to satisfy a debt, such as a missed mortgage payment or to pay for certain financial costs, like overdraft fees. Bank setoffs can occur at financial institutions other than banks, including credit unions and savings and loan associations.
There are some limitations to bank setoffs, such as income from Social Security, public assistance or disability benefits, which are usually immune. Also, unless the customer gives prior permission ahead of time, or his or her credit card contract says otherwise, no bank setoffs may take place to make up for missed consumer credit card payments.
A lien is a legal notice placed on a piece of real or personal property. It exists to inform anyone interested in the property that the owner owes a creditor some money. The lien is a public record on file at a county records office or state agency, depending on what the lien is on. If the owner of the property wants to sell it, they will have to clear title first. The only way they can do that is by removing the lien, which requires the owner to pay off whatever debt they owe.
A property lien is a very effective way to collect on a judgment, although it may take a while for a creditor to get its money if the property owner is willing to go a long time before selling the property. There is also the risk that a future buyer may purchase the property, even though it has a lien on it, although that is very rare (unless the buyer plans to engage in dodgy financial transactions).