Even after the lawsuit is filed, the creditor usually can t begin collecting until a judgment is entered against the debtor. If a debtor does not respond, he or she is in default and judgment can be entered. In some states, if there s no timely response to the lawsuit, creditors can even take some actions to collect before the judgment is finalized. However, many of the debtor's assets are exempt from execution. If the debtor is owed money by a third party, such as an employer or bank, the third party can be forced to pay the creditor instead of the debtor through a process called garnishment and levy.
Most states only allow creditors to seize one quarter of wages, though.
Texas, for example, allows no wages to be seized. And if you are a debtor, see a bankruptcy attorney before you lose wages or other property. He is chair of the bankruptcy section of the Minnesota State Bar Association for 1999-2000. Ask an expert or become an expert . Click here for details on our Full Disclaimer and Terms of Service.