Three Reasons Debt Collectors Love Tax Season: Your Refund, Your Refund, and Your Refund
Lots of folks do big numbers during tax season: car dealers, accountants, furniture stores, the IRS…and debt collectors. Think about it–have you been getting more debt collection phone calls lately? Are they more persistent and more insistent? Debt collection firms know the same thing other businesses know–there’s a chance you’re getting a refund, and they want a piece of it. Debt collectors and tax season go hand-in-hand, and it could affect you, the consumer, in a big way. In addition to increased potential for harassing telephone calls, tax season is the ideal time for debt collectors to issue strategically-timed writs of garnishment.
Writ of Garnishment: A writ of garnishment is basically permission from a judge to garnish your bank account or paycheck. It’s an easy thing for a debt collector to get–a technicality, really–if a default judgment has been won against you.
Here’s how it works: Let’s pretend there is a judgment against you for $2000.
- Debt collector goes to the Clerk of Courts, who signs off on writ of garnishment.
- Debt collector goes to your bank or employer, and serves the writ of garnishment. (For the purposes of this post, we’re going to assume the debt collector is after the money in your bank account.)
- Since you owe $2000, the bank will remove up to twice that amount from your bank account. (Up to double is allowed by law to cover any possible fees or interest.)
- The money goes to the debt collector. Done.
What happens, you might ask, if you only have, say, $182 in your account when they attempt to collect $4000? Well, you lose the $182, and the debt collector will try again for more later with another writ of garnishment against the same or a different bank account, or your employer.
Writs of Garnishment and Tax Refunds: Here’s the thing. The question consumers with default judgments against them need to be asking at TAX TIME is:
What happens if a debt collector times things juuust right, and the tax refund that I had direct deposited into my bank account is sitting there at the time the debt collector attempts to collect on that judgment?
If you are working with a local consumer attorney to reverse a default judgment or garnishment, please keep in mind the time needed for your case to make its way to trial, and avoid risking your tax refund to bank account garnishment during tax season.
photo credit: sxc.hu/leonardini