STOP WAGE AND BANK GARNISHMENTS!

Stop Wage and Bank Account Garnishments!


When a judgment creditor collects a debt, it may use state law procedures called a garnishment to collect. The garnishment directs the co-defendant, the employer or bank, to withhold money or property that belongs to you. If the co-defendant fails to comply, it can be charged to pay the judgment against you. Therefore, all banks and employers attempt to comply with the garnishment. Usually a garnishment has a return date. It directs the sheriff to levy the judgment against the co-defendant and you. Both you and the co-defendant have the chance to appear in court on the return date. The creditor's rights to the money collected attaches as soon as the co-defendant is served with the garnishment. This is important because even if you stop the garnishment by filing bankruptcy, YOU MUST PROTECT THE FUNDS ALREADY TAKEN UNDER THE GARNISHMENT.

Bankruptcy filing will stop garnishment.

A bankruptcy filing will stop a garnishment on the date the bankruptcy proceeding is filed. However, you will need to contact your pay-roll department to prevent the wage withholding from occurring. Sometimes, employers will require an release of the garnishment or evidence that a suggestion in bankuptcy was filed with the court that issued the garnishment.

Protecting funds garnished.

There are limits on garnishments established under state and federal laws:

Virginia law limits garnishment from your paycheck(s) to twenty-five percent (25%) of your "disposable earnings." This is your pay minus required deductions, like state and federal taxes and Social Security withholdings. A higher percentage of your wages may be withheld in the event of a child support obligation.

Other income sources that can't be garnished include:

Social Security benefits

Retirement plan benefits

Public assistance benefits

And, unless the judgment is for child or spousal support, your income can't be garnished if it comes from:


Workers' compensation awards
Unemployment or disability benefits

Must file homestead deed.

There are also specific exemptions provided by the Virginia law, which are asserted under a homestead deed. Under Virginia homestead law sec. 34-4, $5,000 in cash for you and an additional $500 for child dependent upon you may be protected from your creditor by filing a homestead deed in the locality in which your live. The homestead deed should be filed before the meeting of your creditors (the event in bankruptcy where you appear to answer questions about your assets and financial affairs) if it is obvious that the creditor will otherwise take the money. There is much pressure in a bankruptcy proceeding to get the homestead deed filed because under state law it must be filed within 5 days of the meeting of the creditors.



This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.