Can my wages be garnished after a debt is charged off?

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Can my wages be garnished after a debt is charged off?

A judgement was entered for a debt owed and I set up a payment plan, but after a year of payments the debt has been charged off on my credit?

Asked on July 28, 2011 Michigan

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

When an account shows up as "charged off" in your credit report, that doesn't mean that you don't still legally owe the money, it just means the original creditor has given up on trying to get the money from you.  In other words, a charge off does not mean the debt has been canceled; you still owe that money but likely owe it to another party.

In most such cases, the creditor does not collect the debt from you but rather sells it to a collection agency. Since you owe the creditor, the debt is theirs to "assign" to another party so that they jump into the original creditor's shoes and can sue you as if you originally contracted with them.

At that point the collection agency can sue on the debt in court. If they prevail a judgement will be issued. The collection agency (the judgement creditor) can then garnish your (the "judgment debtor")
non-exempt assets. This includes the garnishemnt of wages as provided under state law.


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