Family Issues

You have debts that your budget skills cannot resolve.  And the creditor is now filing charges against you.  If this is the situation, two things may happen to you, a “wage garnishment” or having “time-barred debts”.

Wage garnishment happens when the judge of the court decides that you must pay the creditor but still you are unable to pay, and the court finally gives an order to your employer to give part of your salary to a government executor, who will in turn, give the money to your creditor.  You may imagine your employer and the government man as the bridge (where your money passes through) between you and the creditor.  No one is really happy in this situation.

When this happens, make sure that you are aware of the exact percentage that the court requires to be taken away from your salary.  And then, you must be prepared for other repercussions as well.  For example, the arrangement will be an inconvenience for the employer and this can be discussed thoroughly by other employees, without your presence most of the time.  In other words, you are one of the hot topics in the gossip mill.

Your employer cannot fire you from your job or demote you from your current position.  At least, not because of the wage garnishment.  But you cannot prevent your employer from having a low opinion of you, and your abilities.  From a supervisor’s point of view, someone who could not manage his own financial obligations cannot be trusted to manage his responsibilities in the company.  This would mean that you would not be considered for promotions and your raises would be few and far between.  That new employee who was hired just two months ago may be given the higher position that you’ve worked so hard to earn for a couple of years already.

Time-barred debts, based on the name, indicate debts that are old.  That is, these were incurred three years ago, or even ten years ago.  This implies that the creditor or debt collector can no longer file charges against you in court.  However, they may still contact you through letters or telephone to remind you of your debt and to create an arrangement on how you can pay them.  But they cannot threaten to sue you.   A debt, being time-barred, practically protects you, the borrower, from wage garnishment.  But there would still be some embarrassment involved especially when the creditor calls your work phone and explains in detail your financial situation to an officemate (or supervisor) who just happens to pick up the phone.

When you have a debt that you cannot pay and receives a “threatening” letter from the creditor, you may take consolation with the fact that our Philippine constitution expressly prohibits anyone from going to prison because of debt.  But then, one cannot really escape from one’s debts.  You will pay it, in one way or the other.

Tags: Credit Reports, budget, Bankruptcy, Debt, Credit Repair