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Is the "garnishment line" ever acceptable?

Date: Mon, 11/12/2012 - 10:34
Submitted by mastertr on Mon, 11/12/2012 - 10:34
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I am my fiancee's financial power of attorney. She currently has quite a bit of debt, the majority of which is from private student loans. As a result, she is receiving calls and letters from numerous collection agencies. She currently makes $8.40/hr, working 20 hours a week. It is unlikely she will be able to secure full time employment anytime soon. I have tried to explain her situation to several of the collectors but of course, they are not very willing to come to an agreement that is realistic based on what she is able to pay. I also am currently working with a credit counseling service, but it isn't going as well as I would like working with them. One of the credit cards that she defaulted on has sued and her wages are being garnished as a result. This garnishment is almost paid off. Is doing nothing and awaiting garnishment ever an acceptable route? I ask this because, only one debt can be garnished at a time. If one of the collectors decides to garnish, isn't there really nothing the others can do (besides continue to send letters and make phone calls) until the debt is paid off. She has no property other than a car (which is the only debt that is up to date) and no stocks or anything like that. It's really a "wait your turn" kind of system, which makes sense to me considering with current income, she wouldn't be able to pay very much more than what's being garnished in the first place. Is a "garnishment line" so-to-speak ever a suggested repayment method (even as a last scenario)?


I'm completely aware that garnishment is likely. I also know that only one collector can garnish at a time. What I'm wondering is, since garnishment is really the only thing that these collectors can do in her case, is there harm in simply waiting for one to garnish and then wait for it to be paid off, and repeat. Basically, using garnishment as the solution to the debt. Obviously not ideal in the least, but since the collection agencies refuse to work with me to develop some sort of repayment plan that is reasonable and realistic based on her income, should it be considered an option?
As for a second job, she has been looking and applying, but so far, no luck. To be honest though, I'm not sure she could handle a second job either if she were to get one, for the same reasons that I have become her POA.


Submitted by mastertr on Mon, 11/12/2012 - 11:00

mastertr

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It's a dumb choice but it is 'possible'. The fact with garnishment is that you will not get a favorable payment amount. If you try to settle the debt before being sued and pay the creditor off manually and not through garnishment, you will generally be able to get a fair settlement. There is no settlement with garnishment, especially if it's a default judgement. I suggest you try to work out a settlement with these people. Try offering a bit higher and have her pick up a second job, maybe something off the books so it can't be garnished and you can use that money to save up for settlements with these private student loans.


Submitted by waffles on Mon, 11/12/2012 - 11:03

waffles

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Thanks, waffles. It is certainly dumb, but I was interested in others opinions on it.
As for settling, as I said, most of these debts are from private student loans. We might be able to settle with the smaller medical and credit card debts, but the ones that make up the majority of the debt are 15,000+ (a couple breaching $25,000) and she just doesn't have anywhere near that to settle in a lump sum, which I know is all that the CA's are interested in.
I do like the "off the books" job idea though. If she can make some extra money doing some on the side work, that could go straight to the debt.


Submitted by mastertr on Mon, 11/12/2012 - 11:28

mastertr

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