Wage garnishment is a legal practice that allows creditors to collect debts by withholding employee’s wages from their paychecks. Every trend that has to do with the economy will most likely have an impact on garnishment rates so you must understand some scenarios that can happen so that you can be prepared. Here, we will present to you how some business trends can impact wage garnishment rates so that your company knows what to expect if something happens.
Unemployment trends
Every debt collector needs to follow unemployment trends in the countries because they need to get their money back, and if there is no money coming in, then they will have nothing to collect. What they do when this happens is pursue the collection of debts more frequently. Also, when businesses go through bad patches and decide to lay off their staff, they then become incapable of paying their bills so everyone should think carefully about what the future can hold and be prepared for the worst.
There is an influx of unauthorized collectors
You need to understand that not everyone who asks you to pay the debt that you owe is authorized to do that. Often, people see the current change in the world for the worse and they want to take advantage of the opportunity to collect something that they are not allowed to. You should check in your jurisdiction who can garnish debts. All you have to do is look up who can garnish your wages in Canada, if you live there, and read about it. Never pay for anything before you check whether the company can collect the money that it is asking for.
Debt levels
If the amount of debt reaches a certain threshold, the collectors may decide to start collecting it more frequently. Also, if they see a change in the way people spend their money, and what their financial plans are, they may start collecting the money. They do not believe that the project someone is doing will lead to success but the opposite so they want to get their money before there is any to take. They want to avoid any need to pursue the debt they are owed so they decide to speed up the collection of the debt.
Industry factors
Those industries that are subject to heavy regulations and experience fast technological changes witness greater salary and employment dynamics. When an economic crisis happens, those who rely more on physical labor will witness more wage garnishments than those who are more innovative. The retailer and hotel industries are more vulnerable to such crises as they depend on customers’ spending, and the damage they see from income decline can result in higher numbers of cases of wage garnishments for workers who are already struggling.
Company trends, wage garnishment rates, regulatory frameworks, and job stability are all closely connected. Policymakers, companies, and those who want to develop sustainable financial practices must work hard to understand these processes and make them less of a harm and reason behind economic downturns that raise wage garnishment rates.
