I'm Being Sued. How can Bankruptcy Protect me?

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. 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 order to protect yourself from wage or bank garnishment or having a lien filed against you.

Federal law allows individual debtors to file bankruptcy in order to protect themselves from creditor actions, including harrassing phone calls and letters, lawsuits, foreclosure, garnishments, and repossession. The filing of a bankruptcy petition immediately issues 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. Upon a debtor’s filing of a bankruptcy petition, 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 normally 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.

If you are facing garnishment and considering bankruptcy, please seek the advice of a qualified attorney. To schedule a free consultation, please contact the Law Offices of Charles Clapp at (404) 585-0040.