Lawsuits

• When a creditor sues you for unpaid debt, no legal action can be taken against you until a judge issues a ruling on the lawsuit. If there are extenuating circumstances attached to the debt, such as a previous payment that has not yet attached to the account or an unanswered complaint related to the debt, you may have the court date listed on your original court papers postponed or the lawsuit dismissed. When the case is dismissed, the creditor cannot obtain a judgment order against you or attempt to attach liens to your property or garnish your bank accounts.
  
  

Judgments

• If you do not answer a lawsuit, or if the court rules in favor of the creditor, the creditor receives a judgment against you for the debt if payment arrangements are not made. After a credit company obtains a judgment, it has the legal right to levy your bank accounts, garnish wages and request liens on your property.
  
  

Disability Protections

• Disability income is protected from garnishment and levies under most circumstances. Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) checks and deposits are classified as protected income as are employer-sponsored disability programs. The only creditors allowed to garnish SSDI, SSI and disability payments are government agencies. If you owe back child support, student loan debt or federal income tax debts, your disability payments may be garnished or offset on a monthly basis to pay down the money owed.
  
  

Bank Account Garnishment

• If you receive SSDI, SSI or employer-issued disability payments, establish a separate bank account for the direct deposit of the funds or let your bank know that your account contains funds that are not subject to garnishment. When a judgment is passed against you, your creditor cannot touch your disability payments but may levy your bank account for any additional funds accumulated. If your bank does not know your funds are protected, your account may be temporarily frozen until you provide proof that the account is protected. Establishing your funds as disability income as soon as possible after a judgment helps prevent bounced checks and inconvenience.