If you are behind on payments, you may have been contacted by a collection agency. But as it can be difficult to tell the difference between these entities, below is an overview of what sets them apart. You can also consult New York collection attorneys to assist you with the collection.
- Collection agencies are third-party agencies contracted by a company to collect payment from those who owe them money. On the other hand, collection attorneys are a type of lawyer that specializes in debt collection and collections lawsuits for creditors or creditors’ lawyers. The two types aren’t exactly interchangeable – even though they both deal with delinquent accounts, only one is qualified to collect all monies owed to its clients through litigation if necessary.
- Wage garnishment, also called wage enforcement, is a collection technique used by collection agencies to collect debts. The agency makes a report of the debtor’s wages, and it then takes the money that the debtor is paid and then keeps it as payment for the debt. Collection attorneys may also try to do this with consumer debt collectors or companies hired by debt collectors. However, collection attorneys have no authority to enforce a garnishment order through court action. Wage orders are usually temporary orders issued by a civil court judge during a debt collector complaint.
- Collection attorneys can go after wage assignments, though only to stop wage assignments for specific amounts. Without the debtor’s written permission, a creditor can’t garnish more than 30 percent of a debtor’s take-home pay. Thus, collection attorneys cannot seek to use wage assignment lawsuits to collect debts that don’t exceed these limits or seek to collect debts beyond the limits set by law.
- Collection attorneys can sue debtors under federal law to collect debts if sued in federal court either through the pre-lawsuit process or after a lawsuit is filed. In a case, a collection lawyer can seek to have the debtor’s wages garnished for up to 30 percent of the debtor’s take-home pay or ask for a judgment against the account before judgment in court. Collection attorneys cannot sue debtors under state law for this purpose.
- Collection agencies can also sue debtors for an order to have wages garnished, but only under state law and only if they are not operating in violation of a state statute or regulation that prohibits them from doing so. If they violate such a statute, they face severe consequences, including civil penalties from the state agency regulating them and possible criminal charges from their clients’ paying authorities.
In summary, collection agencies are not permitted to use wage assignment lawsuits to collect a debt. On the other hand, collection attorneys can use wage assignment lawsuits to collect debts through court action.