The Automatic Stay Stops The Wage Garnishment
When you file for bankruptcy, you obtain an automatic stay. The automatic stay is the instrument which basically tells creditors that they can no longer take certain actions in an effort to collect a debt from you. If you are being garnished and you decide to file bankruptcy, the date of filing and the creation of the automatic stay is what is going to stop your wages from being garnished. Immediately upon the filing of the bankruptcy case, you will be issued a case number as well as a date of filing. This date of filing is the controlling date which dictates when collection is stopped and what happens to garnishment proceeds collected before the date of filing.
If you are someone who is being currently garnished, and money is being taken out of your check, those funds rightfully belong to the creditor prior to your case actually being filed. Upon the filing of your bankruptcy case, no further garnishment deductions shall occur. However, what about the amount that has already been taken out of your check and not yet forwarded to the creditor? Those funds rightfully belong to the creditor up until the time a bankruptcy case is filed.
File Quickly Once You Receive Garnishment Notices
Thus, the minute you receive a notice from a creditor that you wages are about to be garnished, you need to seek bankruptcy protection immediately. If you allow a creditor to garnishing wages prior to actually filing a bankruptcy case, then those funds are forever lost and must be turned over to the creditor. If you act swiftly at the time of learning of a potential garnishment, your attorney should be able to rush the filing so that no funds are actually extracted out of your check. In many cases, I have to explain to clients that the amount already taken out of the check is gone and I cannot get that back. It basically works like this: any amount taken out of your paycheck prior to the case officially being filed belongs to the creditor and cannot be gotten back. Any amount taken after your case is filed, needs to be returned from the creditor to you since the automatic stay had already kicked in.
The best advice that I can give is to seek bankruptcy protection immediately upon notice of future and imminent garnishment. By taking the action, you can help ensure that your wages are going to remain part of your income and not part of the creditor’s bank account in satisfaction of the debt.
