A warning to anyone who’s ever had problems paying off bills or loans: Debt you thought was settled could come back to haunt you.
Paperwork to garnish John Bayerowski’s wages took him completely by surprise.
“I am little angry to say the least, to say it mildly,” said Bayerowski.
Back in 2000, Bayerowski decided he couldn’t afford the payments on a car he financed, so he voluntarily had it repossessed. Bayerowski said he thought his dealings with Credit Acceptance, the company with which he financed the car, were over once they took possession of the vehicle.
He’d forgotten all about it until attorneys for the company jogged his memory in April with a wage garnishment for a judgment they got against him in 2002 for the car without his knowledge.
“Well, it’s 25 percent of what you take home,” said Bayerowski. “It’s the state law so that is going to affect anybody out there no matter what.”
It turns out, he still owed about $3,600 on the 1993 Plymouth Colt, including repossession costs and other charges.
When the wage garnishment was approved in 2002, Bayerowski failed to appear for a hearing about the balance he owed to the finance company, according to court document. The documents show that notice of the default order was mailed to Bayerowski, but he says he never received it.
“I didn’t hear anything from them and I didn’t even get – as far as I can remember – a notice for court,” said Bayerowski.
That’s why he didn’t show up for the hearing. It's something that happens all the time, according to attorney Dalie Jimenez.
“About 80-90 percent of the judgments that individuals have against them in the country are obtained by default,” said Jimenez, an associate professor at UConn School of Law. “That means that the individual never showed up to court.”
Still, that was 2002. Why did the law firm Tobin, Melien and Marohn, which has handled the case for Credit Acceptance from the beginning and continues to represent them, wait 13 years to collect on the judgment?
Attorney William Marohn declined to discuss any reason with the Troubleshooters, but he did recently file an affidavit indicating that the original execution order had been lost.
In the meantime, the original judgment of $3600 has now grown to $6,180, almost double what Bayerowski originally owed. The amount ballooned because of interest, attorney’s fees, court costs, and what court personnel said appears to be state marshal’s fees.
But Bayerowski admits he has moved several times since 2002. That may be why he never received any correspondence regarding the balance he owed on the car.
Although experts say debt won’t be on your credit report after seven years, the Connecticut statute of limitations for collecting on court judgments is 20 years and companies can collect interest the whole time that balance is unpaid.
So what is the incentive for companies to collect quickly when they can essentially wait years and years and get more money in interest?
“The incentive is to get paid right away,” said Jimenez.
However, Connecticut laws were recently changed, and now waiting might pay off bigger than collecting on debts right away.
“The lender will be able to collect the contractual rate of interest,” said Jimenez.
So a car loan with a high interest rate can add up if that debt isn’t paid.
Bayerowski has filed paperwork to try to stop the wage garnishment and get a chance to appear at a hearing to speak about the debt.
To avoid a similar situation, experts suggest you stay in touch with the companies you owe to prevent debts from costing you more than they have to.
Credit Acceptance did not return calls or emails from the Troubleshooters.