Many debtors considering filing for bankruptcy want to know, can bankruptcy stop a wage garnishment because they may have just been informed that their employer has received a writ of garnishment from an old debt they had forgot about and are now facing a wage garnishment and they need to stop it so that they will be able to pay their normal living expenses. There are several reasons why a debtor may be considering filing bankruptcy and find the need to speak to a bankruptcy attorney. One of the top reasons however is a need to stop a wage garnishment. Potential bankruptcy filers should also know that in addition to having wages garnished, if a judgment has been entered, then there may be a lien placed on real estate and bank accounts could be emptied to pay an old debt. Additionally, a judgment can last for 10 years from when it was obtained and it can be renewed for another 10 years if it is not satisfied. The good news is that filing either chapter 7 or chapter 13 bankruptcy will stop any kind of garnishment at the time of filing the bankruptcy case due to something called the bankruptcy automatic stay, which automatically stays any debt collectors from collecting on a debt.
In order for a creditor to start to garnish your wages or bank accounts they must file and serve a summons and complaint on you and obtain a judgment against you. In Washington state you have 20 days to reply to the complaint to avoid getting a default judgement entered against you. If a default judgement is entered against you, then the creditor will proceed with sending a writ of garnishment to your employer or bank in order to start the garnishment process and they may record a lien against real estate, which means the debt would have to be paid when you sell the real estate. Once your employer has received the writ of garnishment they will usually apply the applicable garnishment to your next pay check and will continue with the garnishment until the garnishment is renewed or you have filed for bankruptcy or settled the debt with the creditor. Simply by filing an answer to the complaint, you can extend out the time it takes a creditor to get a judgement against you as a new court date may not be scheduled for up to a year or longer. With that said, your credit could file a motion for summary judgment if they believe they have enough evidence to obtain a judgment without going through a trial. In the period between the filing of the answer and the new court date you can work towards a settlement of your debt, participate in the litigation discovery process in which you may ask the creditor to produce evidence that you owe the debt, or file bankruptcy to put an end to the court case and the debt that you owe. Failure to file an answer in the case may cause your wages to be garnished for up to 25% of your income. Furthermore if you are already being garnished, filing bankruptcy will stop any more of your hard earned earnings from being taken. Typically, once the bankruptcy case is filed, your bankruptcy attorney should fax notice to your employers payroll department that shows proof of your bankruptcy filing and the wage garnishment will be stopped immediately.
It’s common for debtors to state that that garnishment has come out of nowhere any they never received service of the summons and complaint. If that is the case i typically advise consumers to obtain the writ of garnishment from their employer and look up their court case online or in person. From there, consumers should be able to see who the creditor said was served with a summons and complaint and when. If you still want to dispute this debt, you would need to file a motion to vacate the judgment with the court by filing a motion, meeting the requirements to set aside the judgment, and setting the matter on the judges calendar. This process can be time consuming and often fail to set aside the judgment if it can be proven that you actually owe the debt in question. Having an attorney assist you in this process may cost more than just settling the debt with the creditor or may cost you more in the long run, as vacating a judgment can be difficult.
If filing for bankruptcy makes sense to stop your wage garnishment and to eliminate your debt, you should know that if you are able to exempt the funds that were garnished in your case and you file your bankruptcy case within 90 of the garnishment, you may be able to get your garnished funds back from the creditor who garnished the funds.