GARNISHMENT BECOMES WORKER'S 7-YEAR ORDEAL

Sometimes, wage garnishments can be the only way lenders can recover their money. But in some cases, the garnishment can become too costly for the borrower.

In 1989, a woman in Scott County wanted to purchase a second vehicle, a pickup truck. So she went to a bank, filled out the necessary papers and received $6,600 with which to buy the truck.

Seven years, and nearly $7,000 later, Nora Scott (not her real name) no longer owned the truck, her wages had been garnished and she did not have the loan paid off. It took a generous effort from Nora's employer to finally end the garnishment and settle the loan.

Nora ran into financial problems and got behind on her payments a little more than a year after purchasing the truck. But she was surprised one day when a co-worker remarked that Nora's new truck had just been hooked up to a wrecker and towed out of the company parking lot.

After conferring with her husband, Nora called the bank and was informed that her vehicle had been repossessed. The bank officer also said they were requiring payment in full on her loan.

Nora and her husband did not have that kind of money and selling the truck, which the bank did for $1,300, didn't net them enough to cover the loan. In fact, they still owed $3,625.57 to the bank. Defaulting on the payments also ruined any chance of getting a loan from another institution to help them out.

"Our hands were tied," Nora said.

Her next step was to hire a lawyer. The bank's next step was to take the issue to court, where it was decided that Nora's wages needed to be garnished in order to satisfy the loan.

Ten percent of her weekly salary was to be claimed by the sheriff's office, with most of it going to pay off the loan. A portion of the garnishment would also be used to pay court costs, attorney's fees and the sheriff's expenses for executing the garnishment.

For five years, 10 percent of Nora's wages were portioned off by her employer and sent to pay the loan until someone noticed something was wrong.

The personnel director at the company Nora worked for, the person who handled the garnishment on the company's side, noticed that the balance of Nora's loan had not diminished -- even though Nora had paid $3,125 over the five-year life of her garnishment.

Nora's principal had decreased by only $437.03 over that period of time.

The fees that were tacked on to the garnishment did slow Nora's repayment, but it was the original loan's interest of 26.6 percent on the first $457.09 and 14.5 percent on the remainder that was eating the payments.

Nora's company realized that she would be paying this garnishment off for years and took steps to help her correct her situation. The personnel director, under direction from her boss, approached the president of Nora's bank with an offer. Together they worked out a sum, $1,669.22, that the bank accepted to clear the loan and end the garnishment.

Nora's company then loaned her the money, interest free, to pay off the bank and end seven years of payments -- that had totaled more than $7,800, including the final $1,600 and the amount Nora paid after selling the truck.

With more than $3,000 of the principal and $400 in fees still unpaid, plus the enormous interest rate remaining on the garnishment before the deal was worked out, Nora said she doesn't know when the loan would have been settled otherwise.

"I would have paid on this for the rest of my life," Nora said. "There would have been no way I would have been able to pay it off."