Can a creditor garnish your wages? The dirty little secrets you were never told.

Credit card companies have scores of products. They also have just as many ways to collect payments if consumers default. Most people think garnishing wages happens only to those with tax debt. They're wrong. "Anytime you owe someone money and they sue you, they have the right, in most states, to garnish your wages," says Richard Alderman a.k.a. "The Peoples Lawyer," a professor at the Houston University Law Center. So, the next time you decide to ignore a few credit card payments, a creditor may opt to come calling via your paycheck

Simply put, a garnishment is a court order for an employer to withhold wages to be applied as payment of debt. Collection can happen directly with the creditor, or your account may be sent to a collection agency. If you fail to arrange to pay the debt through this process, the creditor can take the next step and sue.

"Once the creditor decides to sue, service of the summons is obtained within a matter of days. The debtor typically has between 20 to 35 days to respond to the legal complaint," says John Mayton Sr., a consumer and business debt expert in Dallas. "Hypothetically speaking, from the time of a missed payment, the actual garnishment could happen in as little as 60 days."

If your wages are garnished, however, you can fight back "Once a person's wages have been garnished, they will have the opportunity to challenge the amount or assert exemptions," says Mayton. But, your best chance for bargaining power comes when the lawsuit is served, not when your employer is about to garnish your wages. Often creditors are willing to negotiate payments during the lawsuit phase, but this is typically the last attempt to resolve the debt. It is here where you may be able to reduce the amount owed.

That's just one method for creditors to collect payment. Here are two other dirty little secrets that may be lost in the fine print of your credit card agreement:

1. Universal Default Penalties Everyone is a potential victim of the universal default rate. Periodically, credit card companies monitor your credit report. If they find you've been late on payments with other debts or accounts, or that you've taken on additional debts, the bank can increase your interest rate because you are now seen as a risk. It doesn't matter if you've had a perfect payment history with the credit card company, they can still hike UP your rate.

2. Reaffirming Debts Asking people to recommit to paying debt was once thought of as a tactic creditors used for people who file for bankruptcy. Today, creditors want consumers to pay old debt with new credit accounts. When you receive the new card, the old debt shows up as a charge that you have now recommitted to paying on a monthly basis. It's like putting a dying debt on life support. Although creditors are required to alert you of the terms of this new agreement, it can be a sneaky practice of buying old debt and getting you to pay under new circumstances.

For those struggling with or ignoring this type of debt, Gall Cunningham, a vice president of Business Relations with the Consumer Credit Counseling Service of Greater Dallas (www.cccs.net), has this warning: "If you are living on the financial edge, any hiccup that comes along is likely to push you over to where you cannot pay your debt. As people get deeper into debt, creditors will use whatever means at their disposal to collect." Therefore, communicate with your creditors to resolve old debts as soon as possible and always read the fine print.

A Window Into Credit Card Debt 

There are an estimated 115 million Americans who carry credit card debt, and chances are you are one of them. Debt can be a great source of depression and frustration, but you have to remember that you are not alone.

On average, consumers have 13 credit obligations, nine of which are likely credit cards.

There is an estimated $2.16 billion in outstanding consumer credit.

Each household has an average of $9,000 in credit card debt.

On average, consumers have access to $19,000 on all their credit cards combined.

An estimated 13.75% of one's income is used toward paying debt.--R.J

(SOURCES: MYFICO, CARDWEB.COM INC., CONSUMER REPORTS. THE FEDERAL RESERVE)