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Get Debt Relief without Resorting to Bankruptcy

Q: I am overwhelmed by credit card and medical debt. Will my wages be garnished unless I file for bankruptcy?
A: Wage garnishment is a possibility. If you are employed and earn more than minimum wage, a creditor who has obtained a judgment against you can file a wage garnishment. This will take up to 25 percent of your take-home pay, which will be paid to your creditor rather than to you until the judgment is satisfied. It may be possible, however, to avoid both garnishment and bankruptcy.
 
Q: How can I avoid a wage garnishment?
A: There are two options that may give you some breathing room in your budget while avoiding wage garnishment.

The first option is to enter into trusteeship in the municipal court where the creditor has obtained the judgment against you. The trusteeship requires you to pay to the court the amount that would have been taken by a wage garnishment. This sum would be divided among all of your listed creditors (not including your mortgage and/or car payment), rather than being paid to only the one creditor threatening garnishment.

The second option is to enter into a debt scheduling agreement with a nonprofit consumer credit counseling agency. In Ohio, Apprisen (www.apprisen.com) is one such nonprofit organization with a number of offices across the state. If you choose this option, a credit counselor would contact your creditors to arrange monthly payments and may be able to convince your creditors to keep interest from accumulating.
 
Creditors are not required to participate in this program, but many of the larger creditors such as banks, hospitals and utilities do participate. Nonprofit credit counseling services provide free initial comprehensive and confidential financial counseling sessions and charge modest fees if a consumer enters into a debt repayment program.
 
Q: I am retired and my only income comes from Social Security and PERS from my years as a public employee. If I do not pay my creditors, will I be forced to file a bankruptcy?
A: No. Your creditors cannot take these funds because they are considered exempt from attachment. (An “attachment” is a court order instructing your bank to pay money from your account to the court.) If your only sources of income are Social Security and PERS (or SERS), you may be considered “uncollectible” or “judgment proof.” If an attachment of your bank account is filed, however, you must request a hearing to show the court the source of your income and that it is exempt from attachment. If you fail to do this, the creditor may be able to keep the money that is attached.
 
Q: How can I decide whether I need to file a bankruptcy?
A: Consult with a bankruptcy attorney or nonprofit consumer credit counseling agency. An attorney or credit counselor will review your specific situation and help you decide the best course of action.
 
2/25/2013
 
This “Law You Can Use” column was provided by the Ohio State Bar Association. It was prepared by Akron attorney Terry D. Zimmerman of Kaffen & Zimmerman.
Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

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