Chapter 7 Bankruptcy & Wage Garnishment
Wage garnishment might sound like a strange concept to those that have never had a debt problem. However, if you are in financial duress, you may have received an order of garnishment. Here are common questions and answers for those experiencing debt problems in the Downriver area.
What is a Garnishment?
Garnishment is a court order to seize particular assets of a debtor in order to satisfy and pay off the debt. The asset in this case is money. In order to have an order of garnishment, creditors must show that they have exhausted normal channels to get their payment. They must then go to court and sue in order for the garnishment to be implemented. Garnishments can either be made against accounts or wages.
How do Garnishments Work?
The way a garnishment is handled depends upon the type of garnishment that is ordered by the court.
If a wage garnishment is ordered, your employer is instructed to withhold a percentage of your after-tax (net) income from your paycheck. This continues until the order is lifted or payment is completed. Once your employer receives an order, they have to inform you and provide you with information and your options. Depending on the timing of your next paycheck, you may have time to talk to the creditor and work out a solution before the garnishment takes effect.
If an account garnishment is ordered, then money from your bank account will be seized. This will happen much faster than a wage garnishment. It is highly unlikely that you will receive any notification from the bank before your account is frozen. This prevents debtors from clearing out their accounts. Once your account is frozen, any activity on your account will be halted. This includes scheduled payments. The bank will determine what transactions should be authorized.
Can Anything Be Done About a Garnishment?
If either your employer or a financial institution has informed you about a garnishment order, there is not much you can do. Legally, banks and employers can not simply ignore the order, no matter how they feel about you or your situation.
However, your bank or employer does have to calculate the withheld money according to the rules of the order. Under federal and state rules, some monies are exempt from garnishment in order to provide you with the means to live. This can include Social Security, government benefits, and a certain portion of your income. Familiarize yourself with these rules to protect yourself.
Any attempt to end the garnishment will have to be made with the creditor. You can negotiate with them, but if they have a court order, they are unlikely to do so.
What Should You Do if You Have a Garnishment?
Because there are many things you cannot do on your own, your first step should be to consult a Downriver bankruptcy attorney that has experience with garnishments. They will begin by making sure that all garnishments are being handled legally and properly, so you don’t lose money unnecessarily.
Your best bet for stopping wage or account garnishment is to pursue a bankruptcy filing as soon as possible. If you are at the point of garnishment, then bankruptcy offers both the financial and emotional relief you may need.
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