Garnishment and Bankruptcy Laws
What is garnishment?Garnishment is the procedure of collecting past dues for accounts with the approval from the court of jurisdiction that is in the same community where the nonpayer lives. Normally, this process requires informing the nonpayer’s employer of the proceedings of the court and then requiring that the employer withholds a certain amount of the employee’s wages out of each pay check. The employer then sends the withheld money to the creditor, and the creditor uses this money to put on the unpaid balance that is due on the debtor’s account. Once the debt has been paid off, the garnishment is considered “fulfilled” and then the employer will be removed from the responsibility of withholding money from the employee’s pay check. Below are the most commonly asked questions about garnishment laws as they apply to bankruptcy.
What are the garnishment laws?When someone’s paycheck is being garnished, the person has the right to receive some part of the paycheck under Federal Law. The Consumer Credit Protection Act provides these individual with the right to:
- 1. Not be fired because they have had money garnished for any type of debt;
- 2. No more than 25% can be taken out of someone’s paycheck for normal debts; and
- 3. Normally no more than 50% to 60% of a person’s extra money can be taken out because of child support, bankruptcy or even taxes.
If someone has a garnishment against another and this other person files bankruptcy and the bankruptcy is not removed, do you have to file a writ of garnishment in order to continue to garnish a person’s pay?In many situations, you will need to simply renew the writ of garnishment, and then have the court approve of this. Once the bankruptcy had been filed and the garnishment gets removed, many people believe that it is best to have the State Court approve of this. Another option that is available would be to file a motion to the bankruptcy court to remove the automatic stay, but since in this case the bankruptcy was removed, this may not be possible. You can also contact the local sheriff’s office that enforced the garnishment and request that they continue with the collections without a court order.
What can someone to in order to stop garnishment?There are two options that are available to someone in order to stop garnishment. One option would be to file for bankruptcy. When the bankruptcy has been filed, it would then immediately stop all garnishments that were in order. The second option would be to contact the creditor and discuss a settlement to where they will agree to dismiss the garnishment.
If someone’s bank got a levy garnishment and money is being held in the state court, if this person files for bankruptcy is it too late for this money to be returned to the individual if filed within 60 days?If the money was retrieved by the creditor, and then someone filed for bankruptcy the process would stop all garnishments and all the money that was collected, but had not handed out to the creditor will be required to be returned to the individual who had filed for bankruptcy. What this means is that any garnishment that has been given to a creditor within 90 days of filing for bankruptcy is required to be returned to this person according to Section 522 11 U.S.C.
When falling into debt many individuals are unable to continue to pay off this debt, which can result in lenders enforcing garnishment from their pay checks in order to make sure that some sort of payment is being made. Often times when a person’s check is being garnished, they file for bankruptcy to clear out the debt and remove the garnishment order. These processes involve considerable legalities that can vary from situation to situation. It is always best to be aware of the law as it applies in your individual circumstances. Asking an Expert to evaluate your situation and provide legal insight is one affordable way of making sure you are on the right side of the law.