Can Filing Bankruptcy in Atlanta, Georgia Protect my Wages from Garnishment?

Yes; if you have recently been served with a summons to answer a lawsuit or garnishment in a Georgia state court, you may be able to file bankruptcy in Atlanta, Georgia in order to protect yourself from wage, tax or bank garnishment.

Garnishment is available for any debt, including those resulting from professional malpractice, auto accidents, breach of contract, past due tax debt, or any other lawsuit. Its most common usages are for consumer debts (including credit cards) and taxes. In Georgia, a creditor can take up to 25% of your net wages in a garnishment action and can take up to the judgment amount out of your bank account.

Federal law allows individual debtors to file bankruptcy in order to protect themselves from creditor actions, including garnishments. The filing of a bankruptcy petition immediately starts what is known as an “automatic stay.” The stay is an order from the bankruptcy court that prohibits any sort of creditor action against the debtor who filed bankruptcy. Creditors are required to stop all collections actions immediately. Because bankruptcy is governed by federal law, rather than state law, the bankruptcy court’s stay trumps any sort of state court action.

For example, if a credit card company sued you in Fulton County State Court for a past due debt and you filed bankruptcy, the bankruptcy stay would serve to stop all proceedings in Fulton County State Court. A bankruptcy lawyer would file your bankruptcy case in federal court, obtain a case number in bankruptcy court and file a document with Fulton County State Court notifying the State Court and the creditor of the bankruptcy filing. The notice of the bankruptcy filing places a hold on the State Court action. If you proceed through to the end of the bankruptcy successfully, the debt associated with the original State Court action will be discharged (or “wiped out”). Upon discharge, the creditor is required to dismiss the State Court action and can no longer pursue you for the debt. More importantly, the creditor cannot garnish your wages or bank account or place any liens against you after the discharge of the debt.

Also, Title 3 of the Consumer Credit Protection Act protects Georgia residents by setting several limits on the amount of a worker’s disposable earnings that a creditor can seize in a garnishment. The Department of Labor defines disposable earnings as the amount left over in an employee’s paycheck after tax deductions. For example, an employee who earns a wage of $8.75 per hour can’t have his weekly wages garnished if his disposable income is not at least 30 times that hourly rate. So, a creditor would not be able to garnish this worker’s disposable income if it amounts to $262.50 — which is $8.75 multiplied by 30 — per week or less.

If you are facing garnishment in Atlanta, Georgia and would like information about filing bankruptcy, please contact the Law Offices of Charles Clapp at (404) 585-0040 for a free initial consultation.