Is it Possible to Declare Bankruptcy to Resist Garnishment?

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Resist Garnishment

Wage garnishment is among the most difficult types of debt collection to defeat.  Up to 25% of your net pay may sometimes be taken by creditors, including credit card companies and medical bill collectors.  Additional deductions might be made for debts owed to taxing authorities like the IRS. A wage garnishment can wreck your family’s finances if you struggle to make ends meet. The Harris Firm, LLC can help you understand this better.

The garnishment process is as follows: The creditor will submit a Process of Garnishment to the court where it has successfully acquired a judgment against you.  The court will then serve the Order of Garnishment to your employer or the local bank based on where the creditor thinks it can make the most money.  

Your employer must begin withholding up to 25% of your pay before sending the money to the court.  Until the creditor condemns the funds, the clerk of court keeps them.  Before the money is transferred from the Court to the Creditor, the Creditor must submit a Motion to Condemn.

In this situation, declaring bankruptcy may be able to give you the relief you so sorely need. The “Automatic Stay” is a potent instrument offered by the bankruptcy code that effectively halts garnishment in its tracks.  The automatic stay, which forces creditors to stop any further collection efforts once a bankruptcy petition is filed, comes into force.

At What Point Does The Stay Not Apply?

The stay is put into place as soon as a Voluntary Petition is submitted. Upon filing, a notification advising all creditors of the stay is delivered to them. After filing, the notification is typically distributed within a day or two. On the day of filing, a copy of the notice is typically available from the court docket without waiting.  The creditor can then receive it via personal delivery, fax, or electronic delivery. A copy should be sent to the HR department of the employer as an employee’s earnings are being withheld.  The garnishment can be halted as soon as this is completed.

Can The Court Refund Me My Money?

The money will be returned to your employer, who will pay it back to you if you declare bankruptcy before the creditor seizes the funds.  The timing of your bankruptcy is crucial for this reason.  Once the money has been transferred to the creditor, it is no longer your property that you can reclaim by declaring bankruptcy.

 

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