<p>The Fair Debt Collection Practices Act applies to debt collectors trying to collect the debts of others, but does not apply to those trying to collect their own debts. Some states also have collection acts that may apply to creditors collecting their own debts. </p>
<p>In some states, once the debt is reduced to a judgment, the terms of the contract are over and state collection laws apply, which may mean that the judgment is now dischargeable in bankruptcy and that is one reason private lenders need to decide if it is best to reduce the debt to a judgment. The federal govt can collect without reducing to judgment.</p>
<p>If the debt becomes a judgment, yes, there are specific garnishment limits on bank accounts, wages, etc., but the court doesn’t reduce the amount to just ‘like $200 per month.’ There is a formula, certain funds (like from SS or unemployment) are exempt, but large sums can be intercepted and used to pay the judgment. If a $2000 tax refund is sitting in a bank account, the entire amount can be garnished.</p>
<p>As far as the spouses, they can be liable in some states (community property states, and a few others where spouses are liable for debts). Money sitting in a joint account? Not a good idea as it might be attached. </p>