Garnishment and How Filing Bankruptcy Might Solve It
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Filing bankruptcy can solve some garnishment problems
There are a lot of reasons creditors might want to take a portion of the income a debtor makes through garnishment of their wages, but before they can garnish anything, every creditor has to get a court ordered judgment against the debtor through a legal petition in a court having jurisdiction. In many garnishment issues, filing bankruptcy can often solve some problems associated with it.
Personal bankruptcy and garnishment story
Posted on February 6, 2012, a debtor considering filing bankruptcy to protect himself against judgments ordering the garnishment of his wages, shared these comments in a bankruptcy forum about his personal bankruptcy story:
“I am a degenerate gambler. I have lost any excess money I have to gambling…I make $24k a year, pay child support directly taken out of my check, and my take home pay after taxes, garnishment, and child support is $1050. My hard expenses is $700 per month. I will be joining a Gamblers Anonymous, but If I could get the one garnishment off my back, I am not even sure I would have to file bankruptcy… One wage garnishment for a judgment had an original debt of $3700. I have paid $4700 so far, but the creditor says I still owe $8,000 worth of penalties and interest. They will not settle the debt. I hired an attorney for $500 to settle it, and he cannot settle it.”
The problem with judgments
The problem with judgments is that they are the expressed will of what a court of law has decided is fair. A creditor can legally obtain principal, penalties, and interest through a successful garnishment process. The debtor in the illustration had his chance to challenge the judgment during the legal proceedings of the lawsuit filed by the creditor to obtain the judgment.
Once a judgment has been rendered, there is little legal recourse for a debtor to pursue other than filing bankruptcy. There is really no reason for a creditor to ever negotiate a judgment away unless the debtor is unemployed or threatening to file bankruptcy.
Maximum garnishment of wages
The maximum garnishment of wages that can be taken out of a debtor’s check, by federal law, is the lowest of the following:
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25% of your disposable income.
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Any amount greater than 30 times the federal minimum wage.
These limits don’t apply to garnishment for unpaid tax debts, bankruptcy court orders, child or spousal support, or voluntary wage assignments.
The moment you file for bankruptcy protection the automatic stay of the bankruptcy starts preventing collection activities of any kind, including any garnishment of wages for exempt or non-exempt debts. The automatic stay will remain in force until the bankruptcy is closed.
Potential resolution of garnishment
Filing for bankruptcy protection, depending on what bankruptcy you file, can permanently remove the garnishment of wages for debts non-exempt from discharge. Exempt debts from discharge, like such debts as child support and student loans, cannot prevent the garnishment of wages continuing once the bankruptcy is closed. In discharged non-exempt debts, a garnishment can be removed from the original court that provided the judgment.
A bankruptcy lawyer can help you determine whether or not any garnishment of your wages is non-exempt and eligible for discharge.
Related articles
- Why Bother to File Bankruptcy? (betterbankruptcy.com)
- Should You File Bankruptcy if You are Collection Proof? (betterbankruptcy.com)
- Eleven Common Bankruptcy Definitions You May Want to Know (betterbankruptcy.com)
- Discharge of Debt in Bankruptcy? (betterbankruptcy.com)
