When a debt collection case goes too far, it can often lead to an attachment of earnings. Your employer is then required to deduct your salary and pay it directly to your creditors.
To find out how much the creditor can deduct from your salary, the amount of money you need to live on is calculated. In other words, how much you need to pay your mortgage, electricity, food, child support and so on. After this comes the creditors' claims.
One way to stop overdrafts is to refinance. If you are able to use your own or someone else's home as collateral, you can consolidate all your debts into a fresh new loan.
Home refinancing means that we consolidate all your debts into a new, fresh mortgage. This usually gives you a lower interest rate and, due to the longer term of the loan, lower monthly costs. This can enable you to take control of your finances and, in the long term, transfer your loan back to a regular bank.
If you have several creditors claiming an attachment of earnings, you usually do not have enough money left after "subsistence" to pay them all at the same time. In that case, the money will go to the creditor who came forward first. Note that even if you have an attachment of earnings and pay off some of your debts, the interest will continue to accrue with the creditors you do not pay anything to. This means that your debt is likely to grow bigger and bigger.
We often find that people with an attachment of earnings do not know how much they owe. Sometimes it is several hundred thousand kroner that customers are not aware of. This is because they think they are paying down their debts with an attachment of earnings, but in reality they are only increasing debts that are waiting to be paid.
This article is part of the Financial First Aid category, a collection of articles dealing with topics related to a strained financial situation, such as reminders and debt collection, late payments, distraints and foreclosures. Read more about Financial First Aid.