Unseen Toll: Wages of Millions Seized to Pay Past Debts

[marmar]

Unseen Toll: Wages of Millions Seized to Pay Past Debts
A new study provides the first-ever tally of how many employees lose up to a quarter of their paychecks over debts like unpaid credit card or medical bills and student loans.

by Paul Kiel, ProPublica, and Chris Arnold, NPR, Sep. 15, 2014, 5 a.m.


Back in 2009, Kevin Evans was one of millions of Americans blindsided by the recession. His 25-year career selling office furniture collapsed. He shed the nice home he could no longer afford, but not a $7,000 credit card debt.

After years of spotty employment, Evans, 58, thought he'd finally recovered last year when he found a better-paying, full-time customer service job in Springfield, Mo. But early this year, he opened his paycheck and found a quarter of it missing. His credit card lender, Capital One, had garnished his wages. Twice a month, whether he could afford it or not, 25 percent of his pay — the legal limit — would go to his debt, which had ballooned with interest and fees to over $15,000.

"It was a roundhouse from the right that just knocks you down and out," Evans said.

The recession and its aftermath have fueled an explosion of cases like Evans'. Creditors and collectors have pursued struggling cardholders and other debtors in court, securing judgments that allow them to seize a chunk of even meager earnings. The financial blow can be devastating — more than half of U.S. states allow creditors to take a quarter of after-tax wages. But despite the rise in garnishments, the number of Americans affected has remained unknown.

At the request of ProPublica, ADP, the nation's largest payroll services provider, undertook a study of 2013 payroll records for 13 million employees. ADP's report, released today, shows that more than one in 10 employees in the prime working ages of 35 to 44 had their wages garnished in 2013.

Roughly half of these debtors, unsurprisingly, owed child support. But a sizeable number had their earnings docked for consumer debts, such as credit cards, medical bills and student loans. ....................(more)

The complete piece is at: http://www.propublica.org/article/unseen-toll-wages-of-millions-seized-to-pay-past-debts

[NYC_SKP]

1. Sad, because we are encouraged to carry debt. Bad idea.

But hard to avoid, especially for those who might lose a business or a job.

Buying a home is the american dream, and having nice wheels, but both mean going immediately into debt.

Happy to own my old car but sad to have lost all equity in my home due to the crash.

Funny how the banksters all safely got through it while the rest of us took the hit.

Still, carrying credit card debt is risky and debt is debt, it doesn't just go away, nor should it.

If we force lenders to just eat it and write it off, they'll extract the loss from us in some other way.

[KurtNYC]

2. So THAT's why Capital One asks: "What's in YOUR wallet?"

[ms.smiler]

3. Most of this debt is securitized and investors have the beneficial interest, not the banks

or debt collectors. The parties who sue consumers don’t actually own the debt nor can they usually prove the debt. They sue consumers because they know that about 95% of the time, the consumer won’t defend themselves and the Plaintiffs can win by default which is about the only way they can win.

If a consumer is sued by any of these scammers, they need to answer the Complaint and appear at the hearing. Make the Plaintiff prove the alleged debt, every penny. Make them prove ownership of the alleged debt. Most often the Defendant will win and it can be accomplished without counsel.

I’m a business person and I don’t recognize debt collection as an industry, instead it’s a racket. These scammers siphon billions of dollars from consumers and improperly and illegally enrich themselves when those same billions should achieve increased economic activity.

Consumers should not permit these companies to obtain judgments without a fight. These companies can execute the judgment and send the Sheriff to levy property. In some states they can levy bank accounts and paychecks.

The American people are hard working and honest and too darn trusting.

[xchrom]

4. du rec.