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I have mentioned in this Blog Series that I teach Consumer Protection as an Adjunct Professor at the University of Alabama Law School. Much of consumer protection these days involves consumer financial protection. That includes most of the laws and regulations that govern consumer finance companies and installment sellers.

So, it came as no surprise to my students that one of their exam questions last month asked for ideas as to what creditors could do about collecting debt if the remedy of garnishment were to become ineffective in the jurisdiction. This is exactly what happened in Alabama as a result of the Renters Realty case last fall.

Not surprisingly, most students focused their answers on enhanced pre-judgment collection efforts—that we know as dunning. In making such efforts, we are reminded to be ever mindful not to commit unfair, deceptive or abusive acts or practices—and to look to the Fair Debt Collection Practices Act as guidance, and to state law and regulations as requirements of conduct.

Students also focused on foreclosure and Article 9A repossession when appropriate under the circumstances.

Next, students reviewed the post-judgment rights of creditors including detinue, replevin and the natural impact, though not very timely impact, of recording a judgment against the debtor.

But, then some students got pretty darn creative. While recognizing the limitations of the FTC Credit Practices Rule—that would not permit the executory (in-advance) waiver of the garnishment exemption—they pointed to the language in the FTC Rule that permits the assignment of wages and the preauthorization of payroll deduction provided that such are revocable and voluntary. Now, granted, some state laws prohibit wage assignments as a matter of law. However, in the absence of controlling state law, there may be other options.

Practice Pointer #1: Check your state’s law and regulation. If wage assignments and payroll deduction authorizations are permitted to a creditor on a voluntary and revocable basis by the debtor, consider adding language to your contracts having the debtor preauthorize such waiver and authorization in the event of default.

Practice Pointer #2: Alabama law prohibits the assignment of future wages. However, if a debtor authorizes a voluntary and revocable payroll deduction and the employer consents to the debtor’s instruction, that could prove helpful—maybe.

Please note: This is the one hundred forty-first blog in a series of Back to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking here.