If you are hit with a garnishment, don’t sprint to bankruptcy court

Nothing will quite strike fear into the heart of a working person as much as a surprise wage garnishment (sometimes called an attachment of wages).

It’s not fun to get your pay voucher, open it up, and find that a big chunk of it has already been taken by a creditor.

Not surprisingly, folks in this predicament often call a bankruptcy lawyer, to see if filing a case would help fix the situation.

Well, the answer is usually “yes,” as the bankruptcy code can be used to terminate attachments. However, bankruptcy attorney Craig Andresen has recently written a nice article outlining why debtors suffering attachments might actually want to wait a while to file for bankruptcy.

The gist of his idea is that because attachments of less than $600 can’t be recovered after the bankruptcy case is filed, it may actually be to the debtor’s advantage to wait a while, have more money siphoned off, and then file a case after a total of $600 is attached, so that it can be recovered through bankruptcy court.

In other words, debtors are sometimes better off not going straight in to bankruptcy, even if they are pissed off and terrified by the garnishment process. It may pay to wait a bit, and actually be able to get the money back after filing.

Congress put the $600 limit in the bankruptcy code so that the court system wouldn’t be overwhelmed with small refund cases, but these cases probably don’t seem “small” to an employee when, say $550 of their pay has disappeared.

But it pays to be smart, get a good lawyer, and strategically file the bankruptcy case at the exact time that it does the most good.


By Doug Beaton

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