But, she's employed at a viable, expanding company http://www.envoymediagroup.com/Contact-Us.html so her wages could be garnished.
I'm not a lawyer, nor I have spent much time in court (knock on wood). I'm just wondering what has to be done in order to garnish wages? Does a lawsuit have to be filed and won? Would that then go down as a public record?
As xraider said, yes, a lawsuit must be filed and won. But I wanted to elaborate a bit to say that doing so would be very easy. In CA, for the smaller loans, Prosper could even file in small claims court itself, without a lawyer. In CA, a business can file two cases a year in small claims court seeking up to $5,000, and an unlimited number of cases seeking up to $2,500. You submit a one page form to the court clerk to start the case, and then you serve the defendant. You get a "trial" date which is usually about two months later. In the large majority of collections cases, the defendant does not even show up in court, so the creditor shows the paperwork to the judge, and gets a default judgment.
30 days later, you file another form with the court and you get a garnishment order. Or if the debtor has a bank account, a different form gets the creditor a writ of execution, which when served on the bank results in the bank forwarding the money, through the sheriff, to the creditor. If the debtor has any real estate, the creditor can file a copy of the judgment with the county recorder, and that creates a judgment lien that will prevent the real property from being sold until the lien is satisfied. If the debtor owns a business, the creditor can send the sheriff to the business for a "till tap" -- the sheriff opens the cash register and takes all the cash (up to the amount of the judgment). There are also procedures for seizing tangible personal property, including cars, intangible assets, interests in partnerships, etc. The bottom line is that there are ways for a creditor to get paid on his judgment, unless the debtor is basically unemployed and broke (which, of course, sometimes they are). But a judgment lasts for 10 years in CA, and can be renewed for another 10 years. So who knows what the debtor's financial situation will be down the road. I've seen cases where the creditor is pursuing collection on a judgment that is 7 or 8 or more years old.
In some courthouses where I serve as a volunteer small claims judge, a large percentage of the docket is made up of these collections cases. There are institutional creditors (like car dealerships, rent-to-own places, consumer finance companies, jewelry stores, etc.) that are in court pretty much every day with a stack of files (sometimes 5-10 each court session -- morning and afternoon). If they can do it, so could Prosper. But why should Prosper -- after all, it isn't their money. It's our money.
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