When a creditor obtains a court judgment against a debtor, wage garnishment can be soon to follow. Most persons subjected to wage garnishment will consult a lawyer to see if it can be stopped, and many of those will file either Chapter 7 or Chapter 13 bankruptcy to stop the wage garnishment. While stopping wage garnishments through an immediate bankruptcy filing is often a good idea, care must be taken to avoid filing bankruptcy too soon.
This might sound a bit strange — after all, if one’s wages are being garnished, and if filing bankruptcy will put an end to this hemorrhage of dollars from the debtor’s pocket, shouldn’t the bankruptcy lawyer be asked to sprint to the courthouse with the bankruptcy petition? Wouldn’t a speedy bankruptcy filing bring the paycheck right back to where it should be? Yes, but often there is more to this question than meets the eye.
Section 522(h) and section 547 of the Bankruptcy Code allows a debtor to recover money involuntarily taken from him or her in the ninety days preceding the bankruptcy filing. These sections apply to wage garnishment, and they are often used to recover money garnished before a bankruptcy filing. Of course, this results in a happy bankruptcy debtor, who has just discovered that he or she actually made money, in a sense, by filing bankruptcy and recovering the garnished funds.
However, there is a catch: section 522(h) and section 547 can only be used in this way if $600.00 or more was garnished before the bankruptcy filing. To put it another way, if $600.00 or more was garnished before the bankruptcy was filed, then all the funds can be recovered by the debtor; if less than $600.00 was garnished before the bankruptcy was filed, then the creditor gets to keep the money.
As you can now see, this is where the bankruptcy debtor needs to get the timing right. It might be a mistake to file the bankruptcy right now if, for example, $550.00 has been garnished from the paycheck, because then the debtor will be unable to get the money back. Often, in this example, if the debtor can stand to wait until one more paycheck is garnished, then the total garnished before bankruptcy will exceed $600.00. This will often allow the debtor to recover every penny of the garnished funds.
Compare the advantages and disadvantages of bankruptcy.
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“Even from the first conversation I had on the phone regarding their services, I knew I was going to choose them. I made an appointment for the following week and was welcomed with no judgement. The whole process was fast and efficient. I worked personally with Misty, Samantha, and Callie but everyone there was extremely helpful when I had questions. There was little to no paperwork and they did most of the work for me. My only regret was not filing sooner!”
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“The staff at Kain & Scott were amazing! They make you feel very comfortable from the first time you step in the door. Everything is well organized and they respond quickly to any questions you have. Shout out to Wes, Calli, Megan, Sarah, and Lindsey you all were great in helping me get my life back. Keep up the good work!!”
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“I have to say I have had the greatest experience filing bankruptcy with Kain&Scott. Kelsey B Quarburg and Jesse A Horoshak were two of the most professional attorneys I have ever worked with. Jesse showed up at my 341 meeting totally prepared. Other attorneys along with their clients weren't. Jesse and I weren’t called up first, so I had the privilege of seeing how this meeting would work. The first two clients and attorneys weren’t prepared at all, they were told by the federal trustees,that they were missing paperwork and information. It took these two clients and attorneys 20 minutes each to get through the process. Jesse had 1 client he was representing before me. The process was flawless, 5 minutes and the process was complete. My meeting took 5 minutes. It proved to me choosing the best law firm matters. Kelsey B Quarburg is the best. She was very professional yet she was also human. She would respond to my emails at odd times of the day and night. She kept me informed every step of the way. Thank you both. Thank you Callie for making sure my paperwork was forwarded and up to date. What a team. Thank you all so much for a job well done ,and I mean this from the bottom of my heart. Once again thank you all,for giving my life back. GOD BLESS YOU ALL ”
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“I am very fortunate to have found Kain & Scott. They made my experience fast, friendly and trustworthy. Thank you to Megan R. for being flexible with payment arrangements and really understanding what other people may be going through and how to do what is best for them. 😊 Thank you to Stephanie Buerger as well,for being very welcoming and easy to work with during my initial info gathering. Thank you gals for making my experience a low stress to the point “filer friendly” experience. ”
- Scott K.