When a creditor garnishes wages or a bank account, filing a Chapter 13 bankruptcy case will stop this garnishment in most circumstances. When wages are reduced by a garnishment, consumers experience financial stress because of the ensuing effect of a reduction in disposable income.
Filing any bankruptcy case invokes the protection of a unique mechanism known as the automatic stay, which automatically stops or enjoins any further collection efforts by creditors. Although the automatic stay is subject to exception, a bankruptcy petition once filed operates as a stay, applicable to all entities.
The automatic stay takes immediate effect at the precise moment a debtor files a bankruptcy petition and the court assigns a case number. Once a case is filed, a notice of the case filing must be given to an employer or financial institution so that the garnishment stops.
An experienced bankruptcy attorney may handle all the typical issues and problems encountered with wage garnishment. It is usually necessary to give notice of the bankruptcy to the payroll department of the debtor/garnishee’s place of employment. Also, any person responsible for levying the garnishment should be given notice of the bankruptcy. A qualified bankruptcy attorney may provide helpful assistance with ensuring that all appropriate parties receive notice to immediately stop any garnishment.
If certain conditions are met, any wages garnished before the bankruptcy case filing may be recovered by the debtor. For a debtor to recover garnished wages, these wages must have been garnished within the 90 days before the filing of the bankruptcy case and total $600 or more.
Theron Morrison cares about protecting your rights. Talk to the Morrison Law Group about your Chapter 7 or Chapter 13 bankruptcy options. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.