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What happens when Arizona residents can't pay bills?

With Black Friday sales behind Arizona residents, they may now be looking at their credit card bills and trying to remember why it is they bought so many things that they didn't need. Keeping up with the payment of these bills is important in order to keep debt down and avoid wage garnishment or repossession of assets. But what happens when it is no longer possible to make payments and bills start piling up? Being aware of what happens in these situations may help ensure that debt collection agencies do not take advantage of vulnerable debtors.

The first thing Arizona residents should expect is a phone call from a debt collector. Debt collection agencies often begin harassing debtors to the extent of calling them at all hours at all locations; however, this type of collection action is not allowed under the Fair Debt Collection Practices Act. According to this law that was enacted to protect consumers, third-party debt collectors cannot call debtors at unusual hours, usually defined as before 8:00 AM and after 9:00 PM, and cannot call people at work if they are told that their employers prohibit such phone calls at work.

When it comes to wage garnishment, it is also important to know how much can be taken from a debtor's paycheck. Before garnishing a debtor's paycheck, the creditor must obtain a court order, which allows them to take money directly out of the debtor's paycheck. Garnishments are limited to a quarter of disposable earnings and the remaining income must equal at least $217.50 a week. Other garnishments have different limits that may exceed 25%, however, and often are of a higher priority than debts owed to regular creditors, such as child support orders.

When debt exceeds credit and becomes unmanageable, one of the options available for Arizona residents is declaring bankruptcy. Bankruptcy proceedings put an end to wage garnishment and creditor harassment and even can put an automatic stay on foreclosure proceedings.

Source: The Tribune, "Consequences of Black Friday debt: Collection calls and wage garnishment," Ed Zalewski, Dec. 8, 2013