**Disclaimer – Debtprison.net does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.
A reader at How to Deal with Collection Agencies asks if her grandmother should continue trying to make payments on a debt sold to a collection agency.
I have a question; my grandmother had an account that has now been turned over to collections. Just by not knowing what else to do because they are very rude to her she has started paying on the debt, but they continue to charge interest on the account and they tell her they cannot send her payment information and such on the account. They said she could pay on it 6 years and still not have interest paid off?? She always pays her bills and this got lost somewhere 3 to 4 years ago when she was sick with her heart? Is this right, and what can we do if anything…..
Julie
Debt Prison response…
Hey Julie,
First off, your bill should state the principal amount of the debt as well as the interest rate. The problem here (and I’m making an assumption) is that she doesn’t have the money each month to make large payments. As a result, she is caught in a cycle of basically paying the interest on the principal each month. Is there anything she could sell to pay this debt off?
Now it seems that she owes the money and therefore wants to make good on it. However, the problem is that these collection vultures are getting rich off the interest fees and making it impossible for her to satisfy the debt. After all this is how they make their money. But it sounds like your grandmother is easy prey for these vultures and they aim to feast!
I would demand all interest charges be dropped. I would inform them that I would make a monthly payment against the principal only. They must agree to these terms in writing. If they don’t want to agree to the terms… No problem, they don’t get another dime. They could then pursue a judgment against your grandmother via civil court. In which case she (and you) could simply go and inform the judge that it was impossible to satisfy this debt due to the outrageous interest charges. Likely such actions would put an end to the interest charges and make it easier for grandmother to finish paying this thing off while she’s still young. Either way she’d have to conform to the terms of the judgment.
Also, if she makes little or no income she can’t be collected on. There’s a federal minimum (and if she makes under it) she can’t be touched. They could still get a judgment, they just couldn’t collect it.
Another option is to continue to pay what she can on the debt each month. We all need to pay our debts… I’m not debating that. But what I am debating are outrageous interest charges and fees. Collection Agencies often tack on as much money in fees and interest as they possibly can. It’s your job to inform them you won’t pay it…
Also, another option is to seek legal advice from a local lawyer you trust. It doesn’t cost much and could possibly save her thousands of dollars and fewer sleepless nights.
If more questions feel free to ask.
Good Luck!!!
What are the restrictions on wage garnishment?
The amount of pay subject to garnishment is based on an employee’s “disposable earnings,” which is the amount left after legally required deductions are made. Examples of such deductions include federal, state, and local taxes, the employee’s share of State Unemployment Insurance and Social Security. It also includes withholdings for employee retirement systems required by law.
Deductions not required by law—such as those for voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchases of savings bonds, retirement plan contributions (except those required by law) and payments to employers for payroll advances or purchases of merchandise—usually may not be subtracted from gross earnings when calculating disposable earnings under the CCPA.
The law sets the maximum amount that may be garnished in any workweek or pay period, regardless of the number of garnishment orders received by the employer. For ordinary garnishments (i.e., those not for support, bankruptcy, or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25 percent of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $6.55 an hour).
For illustration, if the pay period is weekly and disposable earnings are $196.50 ($6.55 × 30) or less, there can be no garnishment. If disposable earnings are more than $196.50 but less than $262.00 ($6.55 × 40), the amount above $196.50 can be garnished. A maximum of 25 percent can be garnished, if disposable income earnings are $262.00 or more. When pay periods cover more than one week, multiples of the weekly restrictions must be used to calculate the maximum amounts that may be garnished. The table and examples at the end of this fact sheet illustrate these amounts.
What about child support and alimony?
Specific restrictions apply to court orders for child support or alimony. The garnishment law allows up to 50 percent of a worker’s disposable earnings to be garnished for these purposes if the worker is supporting another spouse or child, or up to 60 percent if the worker is not. An additional 5 percent may be garnished for support payments more than l2 weeks in arrears.
Are there any exceptions to the law?
The wage garnishment law specifies that the garnishment restrictions do not apply to certain bankruptcy court orders, or to debts due for federal or state taxes.
If a state wage garnishment law differs from the CCPA, the law resulting in the smaller garnishment must be observed.
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* How to settle your debts on your own
* How to deal with collection agencies
* Sample Debt Validation Letter
* Information on Credit Card Balance Transfers
* How I Escaped Credit Card Debt
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