Sting of garnishment from years ago still lingers

I have a confession to make.

In 1992, my wages were garnished. Presenting it as a confession makes it sound like it was something I'm embarrassed about. In fact, I am ashamed that it happened -- given the fact that I'm now a personal finance writer and interview experts who warn people to avoid doing what I did those many years ago. Who hasn't done something they regret? And making those early mistakes is how we learn to do it right the next time. It's what we should encourage our children to do while they're young and when the mistakes don't lead to more serious repercussions.

For those who don't know, a garnishment is when a creditor or debt collector goes to court and wins a judgment to collect money on an outstanding debt by collecting it directly from your paycheck. Employers receive a court order or summons to garnish a portion of workers' wages and send them directly to creditors. Today, it's more commonly used to collect child support payments from parents.

Head in the sand
Soon after I purchased my first home, I broke the lease on my apartment. Under the advice of my husband at the time, I moved my furniture, put the keys to the apartment in the slot of the manager's office and walked away from the lease.

More than a year later, after my marriage had ended, I got a letter in the mail from a law firm I didn't recognize. Something about owing money to that apartment building. I put that letter in a pile of junk mail and forgot about it. Then a few months passed and I got a letter from the court, sounding threatening and ominous about judgments. This time, I tucked it in my purse and carried it around in there for a long time.

The next thing that happened sure got my attention. My weekly paycheck was shorted by several hundred dollars. I called my company's payroll supervisor with outrage in my voice. But the outrage quickly turned to a meek whisper when the woman said, "You should already know about this and have gotten papers on it." I had, of course, but had buried my head in the sand.

My wages were garnished for about five weeks -- until the money, about $1,500 or so -- was paid in full. It was a good thing that I had money in savings to supplement what I lost in wages. I counted down the weeks until that debt was off  my back. When it was over, I got a letter from the attorneys representing the apartment building.

The letter reads: "Enclosed for your records is a Satisfaction of Judgment in the above matter. We shall now consider this matter closed."

Of course, the garnishment went on my credit report as a ding. A few years afterward, I applied for a home mortgage and I took a hit. I got the mortgage, but at a higher interest rate. I also had to write a letter explaining the incident to the loan underwriters.

Zombie debt
I still have the letter from that law firm confirming satisfaction of the debt. It is tucked away with all of my important papers. I thought of it as I interviewed Kurt Johnson several months ago. Johnson heads the North American Collection Agency Regulatory Association (NACARA), a group of regulators that oversees debt collection investigations and complaints in 20 states.

During the interview, Johnson warned about the 'zombie debt' phenomenon -- that's when ancient debts that may or may not have been paid off are resurrected by debt buyers who begin collection efforts anew.

"I still have proof where I paid off my student loans," Johnson told me. "I've seen cases where they came after someone after 18 years for a student loan."

Johnson says: "How long should you keep documentation? Important documents with regard to settlement of debt or payment of significant debt should be kept with your long-term documents."

He adds: "Educate yourself if you receive a paper or contact, don't ignore it. If you receive a summons or judgment order or notification, read it. Often consumers wait until the judgment letter comes."

Word to the wise
All good advice. I'll keep my debt satisfaction letter forever, if I can -- just in case the apartment lease fiasco comes back to haunt me.

See related: Ignoring credit card debt can lead to wage garnishment,  11 tips for dealing with debt collectors, Consumer credit woes mean debt collection boom