Ridland Has Had Severe Problems Staying Out of Debt

question 45

Multiple Choice

Ridland has had severe problems staying out of debt. He has several creditors who wish to file a garnishment against his wages. Can all of the creditor's file the garnishment at once?

• A) Yes, all of the creditors can take a portion of the wages to satisfy Ridland's debt.
• B) Yes, the court will collect the garnished wages and divide the money up amongst the creditors.
• C) No, only one garnishment will be permitted at a time, and the first creditor to file will usually receive the garnished wages.
• D) No, only one garnishment will be permitted at a time, and the creditor with the largest claim will usually receive the garnished wages.
• E) No, only one garnishment will be permitted at a time, and the creditor with the smallest claim will usually receive the garnished wages.

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Definitions:

Account Receivable

Funds that customers owe a company for products or services received but not yet compensated for.

Written Off

Written off involves removing an asset or debt from a company’s financial statements, acknowledging that the asset has lost all value or the debt cannot be collected.

Reinstated

The act of restoring something to its previous condition or position, such as reinstating an employee after suspension or a policy after being temporarily revoked.

Allowance Account

An account used in accounting to record reductions in the value of receivables, such as allowances for doubtful accounts.