Sometimes you can’t get to a bankruptcy lawyer in time to stop a garnishment from starting. This probably feels like a terrible situation, because all of a sudden you don’t know how you’re going to pay your rent, let alone hire a lawyer. Don’t worry. If you have a job, then you have a solution.
Affording Bankruptcy After the Garnishment Starts
This is why I offer qualifying clients the ability to file bankruptcy without paying any upfront attorney’s fees. Usually I ask that you pay the costs; but, if you are being garnished I can make an exception.
This means that you have to file a chapter 13 bankruptcy, but don’t let that worry you. Most of my clients qualify for the absolute minimum plan payments. A chapter 13 payment is based on income minus expenses. A garnishment is based on a percentage of your paycheck. A chapter 13 plan payment will be less than a garnishment and it will get rid of all of your debts.
Getting Your Money Back
If the creditor has taken a large sum of money in the last 90 days, then you can get it back using an avoidance action. An avoidance action lets you undo the garnishment. There are a couple of requirements and you need to make sure you talk to a bankruptcy lawyer about how this will work in your case.
- You have to file an adversary proceeding. This is a lawsuit within a bankruptcy. Since you are most likely filing a chapter 13, the attorney’s fees can be paid through the plan.
- The next step is that your lawyer must structure your exemptions so that you have what the courts call standing to bring the action. This is fairly straightforward, but it requires that your lawyer be familiar with Section 522(h) of the Bankruptcy Code.
- Finally, your bankruptcy lawyer has to file a complaint to avoid a preferential transfer. Anything that the creditor got from you within 90 days of your bankruptcy, could be considered preferential.
I know that a garnishment is stressful, but not only can a bankruptcy stop a garnishment, it could even recover some or all of the money that was taken from you.