Hard-working people all over the Sacramento area are living paycheck to paycheck. And it is really hard to make sure that the kids are fed, the gas tank is full, and the rent is paid when that paycheck has to stretch further and further. As hard as that is, it is down right devastating when that paycheck comes and there is a wage garnishment taking away a huge chunk of those hard-earned wages.
This scenario is far too common. But bankruptcy can be the answer. If a creditor has issued a wage garnishment order and started garnishing wages, bankruptcy can stop the garnishment in its tracks. In some situations, the bankruptcy can even make it so the creditor has to give some of the money back.
Before a creditor can garnish wages, they must have sued the consumer in court and won a judgment. These types of debt collection lawsuits happen all the time. So, the best way to avoid a wage garnishment is to avoid the judgment in the first place.
If it’s too late to avoid the judgment, then it is best to quickly act to make sure that the creditor doesn’t garnish wages or levy bank accounts. Losing 25 percent of a paycheck is a disaster, so being proactive is extremely important. Ideally, it is best to file bankruptcy before the wage garnishment starts. So, it is a good idea to very quickly contact a bankruptcy attorney when the payroll department is notified of the wage garnishment order.
Sometimes, judgments sneak up on people because they are old or the consumer never actually received notice of the judgment. This is yet another reason to periodically monitor credit reports. They can be a good canary in the coalmine to tip off a wage garnishment or bank levy. And just because a judgment is old does not mean it can’t be used. Judgments in California are good for ten years. And creditors are allowed to renew a judgment. At accrued interest of 10 percent per year, old judgments can turn into a real problem.
There are some exceptions that bankruptcy cannot fix. The most common example is domestic support obligations. These debts have high priority in a bankruptcy case and are not dischargeable. Therefore, if wages are being garnished in order to satisfy child or spousal support obligations, the bankruptcy will not stop the garnishment.
If a number of conditions are met, a consumer debtor may be able to get some of the money back that was previously garnished. Debtors can usually get back wages garnished within the 90-day period prior to the bankruptcy filing if the total was more than $600 and the money is exempt.
When living paycheck to paycheck, a wage garnishment can break a family’s finances. Bankruptcy can certainly be the solution. Bankruptcy can get rid of most judgments and it will immediately halt most wage garnishments and bank levies. In light of such financial dangers, hiring the right bankruptcy attorney is the best decision you can make to regain control of your finances.