Wage Garnishment Defense: A Legal Emergency Guide
Wage Garnishment Defense: A Legal Emergency Guide
Introduction: The Paycheck Crisis There is no financial stress quite like opening your pay stub and seeing that 25% of your earnings are gone. Wage garnishment is the nuclear option for creditors. It means they have sued you, won a judgment, and obtained a court order forcing your employer to divert your wages to them. For a family living paycheck to paycheck, a garnishment is a catastrophe. It often leads to missed rent payments, eviction, and food insecurity. It also creates workplace embarrassment, as your HR department is now involved in your debt problems. The most important thing to know is that garnishment is not inevitable. Even if the order has already been sent, you have the power to stop it. However, time is your enemy. Every day you wait is another day your hard-earned money is sent to a creditor instead of your family. Utilizing the immediate protection of a bankruptcy 13 lawyer is often the fastest way to stop the bleeding and potentially recover funds that have already been taken.
The Mechanics of the Automatic Stay Federal bankruptcy law trumps state court garnishment orders. This is based on the Supremacy Clause of the Constitution.
The Immediate Halt: The moment you file a bankruptcy petition (even an emergency skeleton petition), the "Automatic Stay" is triggered (11 U.S.C. ยง 362). This is a federal injunction that prohibits all collection actions.
The Notification Process: Your lawyer will immediately fax or email the "Notice of Bankruptcy Filing" to your payroll department and the creditor's attorney.
The Result: Your employer must stop the garnishment immediately. If they continue to deduct money after receiving notice, they can be held liable for violating a federal court order.
Recovering Garnished Wages: The 90-Day Rule Here is a powerful legal secret: You can often get your money back. Under Bankruptcy Code Section 547, the Trustee (or the debtor) can recover "preferential transfers" made to a creditor in the 90 days before filing.
The Threshold: If the creditor took more than $600 (adjusted periodically) from your wages in the 90 days prior to your bankruptcy filing, that money can be "clawed back."
The Strategy: Suppose a credit card company garnished $300 from your last three paychecks (Total: $900). You file Chapter 7 today. Your attorney can demand the return of that $900.
Funding Your Defense: Many clients use this recovered money to pay their bankruptcy tax attorney or legal fees. Essentially, the creditor ends up paying for your bankruptcy!
IRS Garnishments: A Special Case Garnishments for federal tax debt operate under different rules. The IRS does not need a court judgment to garnish you.
Chapter 7: Filing Chapter 7 will stop an IRS garnishment temporarily. However, if the tax debt is recent and non-dischargeable, the IRS can resume collecting after the case closes.
Chapter 13: This is the superior tool for tax issues. A Chapter 13 filing stops the IRS garnishment for the entire 5-year duration of the plan. Instead of the IRS taking what they want (which can be high), you pay them what you can afford through the plan. It also stops penalties and interest from accruing, which can save you thousands of dollars.
Bank Levies: The Silent Garnishment Often, creditors don't just go after wages; they go after bank accounts. This is called a "Levy." They freeze your entire account up to the judgment amount.
The Frozen Funds: Once the bank freezes the money, they hold it for a set period (usually 21 days) before sending it to the creditor.
The Race: If you file for bankruptcy during this holding period, the money is still technically yours. The Automatic Stay requires the bank to unfreeze the funds (though this often requires your lawyer to file a "Turnover Motion"). If you wait until the money is sent to the creditor, it is much harder to get back.
Conclusion: Act Fast to Save Your Income Wage garnishment is a sign that you have lost control of your financial situation. Bankruptcy allows you to seize that control back. It is a tool designed to protect your livelihood. By acting quickly, you not only stop future deductions but can often reverse the damage of the past few months. Do not let embarrassment stop you from seeking help; your paycheck belongs to you, and the law provides a way to keep it.