Bankruptcy acts to stop garnishments because creditors cannot make any collections efforts upon the filing of a Chapter 7 or Chapter 13. A garnishment is a method by which a creditor who already has a judgment can collect money. Thus, if you're at the garnishment stage, that means you have already been sued in the past, and a judge issued a judgment against you.How Much Can a Judgment Creditor Garnish?
Under Georgia law, when a creditor obtains a judgment against you, it may be able to garnish your wages or bank account as follows:
- Creditors can garnish 25% of your pay check each pay period.
- Creditors may also be able to garnish your checking and savings accounts directly and take unlimited amounts of money up to the amount of the judgment in your bank accounts to satisfy your debts to them.
Filing bankruptcy initiates a protection by the court called the "automatic stay." The stay applies to all creditor actions, including garnishments. A bankruptcy filing immediately stops the garnishment process. When debtors hire the attorneys at Law Offices of Charles Clapp to stop a garnishment, we file the bankruptcy as soon as possible and notify the creditor who is garnishing the debtor of the bankruptcy filing.When Should I File Bankruptcy to Stop a Garnishment?
You should file bankruptcy as soon as possible after receiving notice of the garnishment. In Georgia, the garnishment is served upon the bank or the employer, and the bank/employer has to answer the garnishment and withhold money to send to the court within 30 days of being served. Thus, you want to file your bankruptcy case before the money is sent off to the court.Can I Get My Money Back of the Garnishment Already Started?
If the creditor has already garnished your pay check, you may not be able to recover the money already taken. However, future wage garnishment should stop. You will probably want to contact your human resources or payroll manager to ensure that they are aware that you have filed bankruptcy to stop the garnishment.
When a creditor files a bank garnishment, your bank will place a hold on your account. The bank is required to answer the creditor’s garnishment action, so if you file bankruptcy before the answer is due, you may be able to stop the creditor from taking the funds in your account.What Other Actions Can a Creditor Take Against Me?
If a creditor filed a wage or bank garnishment against you, then the creditor likely also filed a lien against you that is known as a Writ of Fieri Facias (“Fi Fa”). A creditor files the Fi Fa in the county in which you reside, and the Fi Fa attaches to all property that you own. When you file bankruptcy, you can ask the court to extinguish the lien if you have no unexempt equity in any property.Are There Any Alternatives to Bankruptcy?
In Georgia, you can file a traverse of garnishment in order to dispute the garnishment action. However, a traverse will not be successful, unless it shows that the judgment is void or was wrongfully obtained. That is pretty difficult if the creditor sued you and served you properly before filing the garnishment suit. Plus, filing a traverse often requires you to go backwards into the original case where the judgment was issued to dispute the validity of that judgment. For example, in Georgia, personal service or service by publication is required. If you never got served with a copy of the lawsuit, it may be a grounds for vacating the judgment.
You can also try to settle the debt with the judgment creditor. However, if you're already at the garnishment phase, settling the debt at a reduced rate will be more difficult. Usually, if you're looking to settle debt at a discounted rate, you'll want to offer a significant lump sum.
If you have any further questions about garnishments please call Law Offices of Charles Clapp at (404) 585-0040 or contact us on the web for a free consultation with a bankruptcy attorney.