What happens if you're self-employed and a creditor tries to garnish your wages?
Summary
If you are self-employed, creditors cannot take money directly from your wages like they do with regular employees. However, creditors who get a court judgment can use other methods, such as freezing your bank accounts or placing liens on your property, to collect debts. The rules for these actions vary depending on the state you live in.Key Facts
- Wage garnishment means a creditor takes money from your paycheck before you get it.
- Self-employed people don’t have wages taken because they don’t have an employer to garnish.
- Creditors can still collect debts after winning a court judgment.
- They can freeze and take money from your bank accounts, especially if you mix business and personal accounts.
- Creditors can place liens on your property, which can stop you from selling or refinancing until the debt is paid.
- They may be able to take money owed to you from clients or customers.
- State laws differ on what protections you have against these collection methods.
- Negotiating a settlement with creditors can stop collection efforts even if it may hurt your credit score.
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