Debtors’ rights are rights that are guaranteed by law for those who borrow money (the "debtor"), whether it is for buying a home, a car, or personal use. These rights protect debtors from being treated unfairly by creditors. Different rights are available for different situations.
Garnishment means that a creditor is taking a certain amount of money out of a debtor’s wages, bank accounts, or other monies payable. A creditor cannot use a garnishment against a debtor unless the creditor has won a judgment in court against the debtor.
Some types of money cannot be garnished, including:
- Government Benefits (Social Security, Worker’s Compensation, etc.)
- Child Support
The only way to end a garnishment is to either pay the debt or file a Garnishment Exemption Claim Form with the court that issued the judgment against you. This form is fairly complicated, and you should probably seek the advice of a lawyer before filing one.
A Levy (or Attachment) is the taking and selling of a debtor’s property to pay off his debt to a creditor. A creditor can only get a levy against a debtor if the court has issued a judgment in the creditor’s favor.
The levying process starts when the sheriff or deputy comes to your home and itemizes all the property that can be sold to satisfy the creditors’ judgment. Some property is exempt from levies, including:
- Up to $5000 in household goods and up to $1000 in clothing
- Prescription drugs and medical aids
- Up to $10,000 worth of tools and equipment used for work or school purposes
- Some amount of equity in the debtor’s home and car as determine by the state
The levying process ends when all the debt has been paid.
A debtor is protected from aggressive collection tactics by the Fair Debt Collection Practices Act (FDCPA). This act protects the legal rights of a debtor. For more on the FDCPA see Collections
Repossession is the taking of property by a creditor where the creditor has an interest in that property. For example, if an individual takes out a car loan and does not make his payments on time, the creditor may repossess the car. Debtors’ have a number of rights that prevent creditors from treating them unfairly when repossessing property. For more information on these rights see Repossessions.
If you misunderstand you rights you could find yourself further in debt by paying a debt you aren’t obligated to pay. An experienced lawyer knows about debtor’s rights in your state, and can help you avoid further liability. An attorney might also help stop a collection practice being made against you.