It might be helpful to make sure you clearly understand the processes, both for credit reporting of the derogs, when/if they can bring civil action to obtain a judgment, and how subsequent wage garnishment or attachment of assets works.
Credit Reporting:
1. A creditor can refer a delinquent debt to a debt collector without selling the debt. They can simply hire a debt collector to attempt collection on their (the creditor's) behalf, and still retain ownership. Thus, you can have a collection report on any delinquent debt.
Both the creditor and the debt collector can simultaneously report on the same debt.
If the creditor has charged-off the debt and still owns it, they can refer to a debt collector, and the creditor account can report any delinquencies, such as a charge-off, and the debt collector can also report their collection.
2. Any collection or charge-off must be excluded from your credit report no later than 7 years plus 180 days from the date of your first delinquency (DOFD) on the account with the creditor. That exclusion applies regardless of whether or not the debt is paid, or you are under a payment plan.
Judgment and Garnishment/attachment of assets:
1. Unrelated to the issue of credit report exclusion, the owner of a delinquent debt can bring civil action to obtain a judgment at any time up to expiration of the statute of limitations for your state. The running of the SOL usually begins on the same date as the DOFD that is used to determine credit report exclusion, but unlike credit report exclusion, an SOL can be reset if you make any payments on the debt.
Thus, in each case where you enter into a payment plan, you have likely set a new begin date of their ability to bring civil action and seek a judgment.
One of the reasons why debt owners are so willing to enter into payment plans is that it "resets" the SOL period within which they can later seek a court judgment.
However, there is no reset of the credit report exclusion period for a collection or charge-off based on any payments made against the debt.
2. If they bring civil action and obtain a judgment, that judgment does not itself order any wage garnishment or attachment of assets, such as taking of eligible property.
The debt owner must first obtain a judgment ordering payment. If you do not comply within the judgment period, the owner can then return to court and request a separate "writ of satisfaction," which is an additional order that then permits specific actions to recover the judgment debt, such as garnishment of pay or taking of property by the sheriff.
The numerous questions as to what can be attached or how much can be garnished is defined under the laws of your state, and is determined by the court after their review of your actual financial situation.. Thus, whether they can garnish, and if so, how much, can only be determined by the court based on the relevant laws and your financial situation. In many cases, a consumer may be shielded from any ability to garnish any wages, making the judgment uncollectible.
You should consult an attorney for advice as to your potential liability if a debt owner seeks a writ of satisfaction.
