I’m seeing more and more people who are contacting me to file bankruptcy after a garnishment has hit their paycheck or bank account. And after the wage garnishment takes the customary 25% of their take-home pay, they are in a real world of hurt.

I always wish that they had contacted me sooner so that I could have prevented the garnishment from happening in the first place.

Filing bankruptcy will both prevent and stop the garnishment of a paycheck or bank account.

The recent economic downturn has increased the number of people who are behind on their credit card payments and other debt payments. And the creditors are filing lawsuits by the millions in the hopes of being able to easily garnish the debtors’ paychecks and bank accounts.

You see, most people who get sued never respond to the lawsuit. That makes it really easy for the creditor because then the creditor automatically wins the lawsuit. The creditor doesn’t even have to prove that the consumer owes the creditor the money. And the creditor doesn’t have to justify to the judge the interest charges and penalties they often tack on. The creditor just get everything it asks for when the consumer doesn’t get involved in the lawsuit.

After winning the lawsuit, the creditor can secure a court order to seize part of the debtor’s paycheck or the funds in a bank account, a procedure called garnishment.

The New York Times reports that wage garnishment across the United States is increasing rapidly, anywhere from 30 to 120% depending on the state.

Why don’t consumers defend themselves more often when they are sued?

Well believe it or not, some consumers do not even know they are being sued.  While the law requires that a person be given formal notice of a lawsuit, some process servers have been caught skipping actual service of the lawsuit and then forging the proof of service that is filed with the court.

However, in most cases, consumers are served properly but still do not offer a defense. Many cannot afford to hire a lawyer and are intimidated or confused by the legal process. So they do nothing.

And even when a consumer does attempt to defend himself, many times he is ambushed by the collection lawyer and enticed to sign a settlement agreement that is not in the debtor’s favor. Furthermore, once a debtor signs a settlement agreement, a new contract has been entered with the creditor. This resets the amount of time the creditor has to collect on the debt if the debtor defaults under the settlement agreement.

Filing bankruptcy can quickly solve the whole problem of garnishment of paychecks and bank accounts.

The moment a bankruptcy case is filed, all further collection activity is prohibited. All law suits must stop right where they are and garnishments are prohibited. If a garnishment has already started, it must stop immediately. And if a single creditor has garnished in excess of $600.00 within the 90 days before the bankruptcy was filed, the creditor can be required to return the garnished money to the consumer.

If you are afraid that your paycheck is about to be garnished or worse yet if your paycheck is already being garnished, contact me today to discuss how bankruptcy can prevent or stop the garnishment. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. Or simply pick up the phone and call me at 918-615-8260. I’ll answer all of your questions and give you straight answers on the pros and cons of bankruptcy as related to your specific situation.

People contact me every day about the subject of wage garnishment. Either their paycheck is currently being garnished or they are afraid that it soon will be garnished by a creditor to whom they owe money.

For people already struggling with debt problems, having a paycheck garnished is a killer. It can mean not having enough money to make necessary living expenses. Like the rent or mortgage payment. Or the car payment. Or the electric, gas or water bill. Or to buy groceries or medicine.

These people want to know one thing. Will filing bankruptcy stop or prevent their paycheck from being garnished? In most cases the answer is “YES!”

You see, the second a bankruptcy petition is filed, an automatic stay goes into effect. And this automatic stay prohibits a creditor from taking any further collection activity without the permission of the bankruptcy judge. If the garnishment has not begun before your bankruptcy case is filed, then the bankruptcy will prevent the garnishment from beginning at all. If the garnishment starts before your bankruptcy case is filed, then the garnishment will stop immediately after your case is filed.

The automatic stay stops or prevents the vast majority of wage garnishments except for a few exceptions such as for child-support or other court-ordered domestic support obligations.

And what’s more, if a creditor has taken over $600 from your paycheck or your bank account within the 90 days before you file bankruptcy, this is known as a “preferential transfer” and the garnished funds can be recovered from the creditor.

If your wages are being garnished or are about to be garnished and you would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.