One day he goes to work and discovers that his paycheck is being garnished for a debt he owes. This happens to people every day. In addition to all the problems in life, you now worry about how you are going to pay your mortgage, your electricity bill, or even your food. When people experience the problems described associated with a wage garnishment, usually the first question they ask is, “How can I stop this?” The answer in many cases is that you will need the help of a qualified attorney. However, first of all, it helps to understand how garnishes are produced.
The creditor must file a lawsuit
For a lien to be enforced, a creditor must have filed a lawsuit against a debtor and obtained a judgment. Liens usually take two forms. Once a judgment is entered, the creditor has the option of garnishing wages or placing a lien on a bank account (i.e. freezing a bank account). The creditor must choose and cannot exercise both options at the same time.
Fortunately, there are ways to stop a wage garnishment or bank lien. Options for stopping a lien include filing for bankruptcy, but may include other methods. If creditors are threatening a wage garnishment or freezing a bank account without first obtaining a judgment against you, the creditor has violated consumer protection laws, including but not limited to the Fair Debt Protection Act. If a creditor has threatened to garnish your wages or freeze your bank account without first obtaining a judgment, call a consumer protection attorney to discuss your rights and what steps to take.
Garnished wages / Collection of bank accounts
Of the two forms of garnishment, most people experience wage garnishment. Most state codes limit the amount of wages that can be garnished based on a person’s annual income. Generally, twenty-five percent of net earnings can be garnished per pay period until the wage garnishment limit is reached.
When a creditor chooses to garnish a bank account instead of garnishing your wages, your bank must hold the funds for a period of time, which includes ongoing direct deposits. Once the time period expires, the funds are turned over to the bailiff for transfer to the court clerk. After the court clerk has received the funds, the creditor must file a Motion to Condemn Funds with the court clerk to receive the money. If the amount delivered to the creditor exceeds the judgment amount, the debtor will receive the excess funds collected.
During the collection period, a debtor cannot access his bank account to withdraw funds. The debtor is advised to suspend any automatic or direct deposit of paychecks or other sources. Also, it is advisable to stop all automatic withdrawals from the bank account during the collection period. Ongoing automatic withdrawals, in addition to the funds raised, can cause significant overdraft fees and bank charges.
Stop the embargo or embargo
Stopping a wage garnishment can be a long and bumpy road. Filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy stops all liens and liens. This is because Bankruptcy Code 11 USC 362 (a) states that once a bankruptcy is filed, an automatic stay is established that restricts all creditors from any collection activity.
If only it were that easy.
Generally, even after filing for bankruptcy, it will take a week to a month or more to stop a lien. This is because several parts have to work together. These parties include, but are not limited to, the following: your bankruptcy attorney; the clerk of the court where the judgment was rendered; the sheriff’s office in the county where the lien was served; the payroll department or bank; the bankruptcy administrator; and the creditor’s attorney. Immediately after your bankruptcy attorney files your bankruptcy, they must send a Notice of Bankruptcy to all parties, including the sheriff’s office. The sheriff is supposed to immediately notify your employer or the bank where the money is collected and let them know that they should stop taking the money and release any wages or money withheld immediately. The payroll department, whether local or out-of-state, can also influence how long it takes to stop a garnishment. Additionally, each county clerk’s office and sheriff’s office handles liens differently. Problems arise and tend to arise frequently.
As you can see, there are numerous moving parts to getting lien and liens released. It is important that you work with an experienced bankruptcy attorney who has an efficient and effective method of dealing with liens and liens.
Get your money back
Finally, there is the question of whether the seized funds can be recovered and returned to the client after they have filed for bankruptcy. One determining factor is how much money was seized through the garnishment. The amount of funds that can be claimed as exempt decides how much can be returned to you.
This, of course, adds an extra step to the equation.
Once the garnishment is stopped, your attorney must write and have the bankruptcy administrator sign a motion to release funds. You will need to be patient and understand that it takes time to get everyone to do what needs to be done.