Unlike many other states, North Carolina law typically prevents credit card companies and private creditors from collecting debts from NC citizens by wage garnishment. While there are certainly exceptions, as discussed below, wage garnishment is not a widely available collections option for creditors in NC.
Wage Garnishment? What is that?
Wage garnishment is the legal terminology used for a court or governmental order to collect funds directly from your employer. It is sometimes also known as a “wage attachment.” A wage garnishment requires your employer to withhold a portion of your paycheck for payment to a creditor.
NC Wage Garnishment is Limited
North Carolina General Statute § 1-362, along with interpretations of that law, heavily limit the ability for non-governmental creditors to withhold wages through wage garnishment. NC courts are unable to issue orders for wage garnishment in favor of your judgment creditors (i.e. entities who have prevailed in a lawsuit against you). Even in instances where NC law does not prohibit garnishment, federal wage garnishment restrictions can limit the extent to which your wages are garnished.
Some Creditors Can Garnish Wages
While most private, non-governmental creditors are not allowed to garnish wages, there are some instances where garnishment is permitted:
- – if you have unpaid income taxes or owe other money to the state/federal government
- – if you have a student loan in default
- – if you have child-support payments pursuant to a court order, or
- – if you are behind on your child support and owe arrears.
North Carolina is one of only four states that have similar limitations on wage garnishments for private creditors. Consequently, it is possible for some out-of-state creditors to obtain a judgment and wage garnishment order against you in their state. In such cases, NC courts tend to honor the judgments of other states, and NC protections against wage garnishment may not apply.
This is Good News – Don’t Rest on your Laurels
As you can tell, there are plenty of situations where garnishment is available to creditors. More, importantly, there are other remedies that are readily available to your creditors to collect the debt that you owe. A judgment against you can allow a creditor to attach to a bank account, require sale of personal property, or attach a judgment lien to your real estate. More so, a judgment remains intact for 10 years after entry, and can be renewed thereafter. Judgments, like the underlying debt, can effect your credit.
While wage garnishment is unavailable in many cases, ignoring a burdensome debt is not an effective strategy for long-term financial health. Coltrane Grubbs & Orenstein, PLLC, offers a free bankruptcy consultation for clients interested in learning more about debt management and the option of bankruptcy.
If you are worried about wage garnishment from a credit card company, a consultation with our attorneys will be useful to you in learning the landscape of debt collection in our state. The best time to consider debt collection defense strategies is early in the collection process. Our bankruptcy consultation is free. Call (336) 996-4166 to set up an appointment today.