What is a Wage Garnishment?
A wage garnishment is a separate post-judgment proceeding filed by a creditor. “Post-judgment” refers to a situation where the creditor has already filed a lawsuit against the debtor and obtained a court judgment either after a bench or jury trial, or after a hearing concerning the debtor's default ( or failure to appear and defend the lawsuit and/or failure to file an Answer in the case.
What Can a Creditor do After Getting a Court Judgment?
Once a creditor has obtained a judgment, life can get very difficult for the Debtor. The creditor is permitted to check the debtor's credit report and discover all kinds of otherwise personal information to help collect their debt. This includes employment information, bank information, residence information, etc. The creditor can use data collected from the debtor while the account was in active status, such as copies of personal or business checks that have routing and account number information. The creditor does not have to file a separate proceeding to legally attach, or “seize” the debtor's bank account funds.
What Rights do I Have Under a Wage Garnishment?
Wage garnishments require the creditor to comply with both state and federal laws prior to their taking place. The Debtor IS entitled to notice of a wage garnishment proceeding, while not being entitled to any pre-notice of a bank account attachment. The creditor cannot take more than 25% of the debtor's paycheck under federal law, and most states have additional protections which require the creditors to line up one at a time to garnish the debtor's payroll check. Additionally, most states require the creditor to serve the debtor with a worksheet to determine what deductions the debtor is entitled to while working down to a net figure of earnings that are subject to the wage garnishment.
What Can a Judgment Creditor Take from Me?
A creditor is not permitted to garnish, levy upon, or seize any funds owned by the debtor which are listed as exempt under state or federal law. This can include public assistance, child support, veteran's benefits, certain pension funds, social security, etc. The debtor in a wage garnishment proceeding can ask the Court to schedule a hearing so that the the debtor can present evidence that certain funds are exempt, and not subject to garnishment ( this also applies where the creditor has seized bank account funds; any exempt funds must be returned to the debtor.
What Defenses Do I Have to a Garnishment ?
There are limited defenses to a wage garnishment. Once the creditor obtains the judgment the creditor is free to utilize all options available under federal and state law to collect the debt. Fortunately, this is not the end of the line for the debtor. The United States bankruptcy code provides that upon the filing of a bankruptcy petition by an individual, the Court issues what is known as an “automatic stay” order under 11 U.S. Code Section 362. The automatic stay is perhaps the most powerful legal weapon in the debtor's toolkit in holding off creditors.
Does a Bankruptcy Filing Stop a Wage Garnishment and Bank Attachment ?
Once the automatic stay order is issued by the U.S. Bankruptcy Court, any actions taken by creditors to contact the debtor or to collect directly on the claim without permission of the bankruptcy court can be determined to be contempt of the automatic stay order. When a creditor is found to be in contempt of the automatic stay order the bankruptcy court can order the creditor to pay damages to the debtor, the debtor's actual costs, and attorney fees incurred to enforce the order.
If you have questions about wage garnishments, the automatic stay, or the bankruptcy process in general, please do not hesitate to contact Bankruptcy Law Attorney Kevin M. Ryan at 251-431-6012.