How can creditors collect on bad debts?

Creditors in Tennessee can take legal action to collect on bad debts. The most common method is filing a lawsuit. If a creditor wins a lawsuit, they can obtain a judgment. This judgment allows the creditor to garnish the debtor’s wages or levy against any bank accounts and property owned. The creditor can also seize the debtor’s nonexempt assets. Creditors may also take advantage of post-judgment remedies. These can include wage garnishment, levying against the debtor’s bank accounts, or seizing assets. Under Tennessee law, creditors are able to garnish a debtor’s wages up to 25 percent of his or her gross wages per pay period. Creditors may also pursue the debtor to collect a debt. This is known as “debtor’s examinations,” and allows creditors to ask the debtor questions about their assets and financial situation. The debts can then use the answers to collect the debt. In some cases, creditors can enlist the help of the state or county to collect the bad debt. They can obtain a writ of execution or a writ of garnishment which allows the sheriff or marshal to seize the debtor’s property. Finally, creditors may resort to debt collection agencies. Collection agencies are not allowed to use harassment or threats to collect debts. They are, however, allowed to contact the debtor by phone, letter, or email. If all of these methods fail, the creditor may have no other choice but to write off the bad debt.

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