Wage Garnishment

• A creditor's first move is usually to garnish your income if you work and receive an IRS W-2 form. They can't take everything you earn and leave you unable to meet your basic living expenses, but they can make it hard for you to pay other creditors. Most states allow a creditor to take up to 25 percent of your net income, after taxes. Your employer will receive a notice, legally obligating them to take this amount out of your paycheck, give you the difference, and send the other 25 percent to your creditor.
  
  

Seizure of Assets

• A creditor can also begin seizing your assets and property if it gets a judgment against you. The most common method is to seize the funds in your bank accounts, because this money is liquid and easily reached. If this doesn't satisfy the debt, a creditor can also enlist your local sheriff's officer to go to your home and take salable property, such as your furniture, computer equipment and electronics.
  
  

Liens Against Property

• Though it will not immediately pay off your debt, it is also possible for a creditor with a judgment against you to place liens against your property, such as your home or automobile. This makes it impossible for you to sell the asset until you pay the debt. You don't have clear title to the property as long as this lien is against it. Sometimes the creditor will allow you to sell the property, but only if your debt is paid from the proceeds of the sale.
  
  

Effects on Credit

• Having a judgment placed against you is one step up from filing for bankruptcy, which is the worst black mark against your credit record. Not only will it affect your borrowing power, but it is not uncommon for prospective employers and insurance companies to run a credit check on you and the judgment will appear if and when they do.
  
  

Tip

• Even if a judgment is placed against you, it is sometimes possible to negotiate payments with the creditor on the amount you owe them. If you start making payments, the creditor may cease collection efforts. You should attempt this, especially if the debt is not extremely large. Ten years can be a long time when a creditor is actively taking steps against you to get their money.