The automatic stay is an injunction against against the continuance
of any legal action against a debtor or the debtor’s property. 11 U.S.C.
362. The automatic stay protects a debtor from harassing collection
calls, repossessions, foreclosure sales, and garnishment of wages. The protection from the automatic stay starts as soon as the debtor gets a bankruptcy case number.
For example, let’s say a creditor lawsuit has been filed against a
person who lives in Grand Rapids, MI and that person comes to see me to
file a Chapter 7 bankruptcy. As soon as we get a bankruptcy case number
and notify the creditor of the bankruptcy filing, the creditor must
stop all collection actions.
For another example, let’s say I have a client from Kentwood, MI who
is worried that their car creditor is about to repossess their car.
Once we have a bankruptcy case number and we have notified the car
creditor, the car creditor must stop all efforts to repossess the car.
Any creditor that ignores the filing of a bankruptcy case and
repossesses a car post-petition can be severely punished by a bankruptcy
court.
Tuesday, June 12, 2012
Garnishments: Will they stop and can I get my money back?
When a person files for bankruptcy, they are immediately extended a
number of protections designed to protect them from further actions by
creditors. The very minute a bankruptcy has been filed, creditors can no
longer to seek collection of the debts. This means any garnishments currently occurring must be terminated.
The Bankruptcy Code also provides a means for recovering wage garnishment that occurred prior to filing for bankruptcy. However, in order to qualify you must of had $600 or more garnish from your paycheck within the 90 days leading up to the filing of your case. If you’re considering bankruptcy due to impending wage garnishment, or if you’ve just started having your wages garnished, you may want to consider waiting to file until you hit the $600 threshold. After all, if you’ve had $599.00, it is probably a good idea to wait and allow your creditor to garnish one more paycheck so you break over the $600 line. This way, with the help of your attorney, you can recoup funds from the creditor who has been reaching into your pocket.
The Bankruptcy Code also provides a means for recovering wage garnishment that occurred prior to filing for bankruptcy. However, in order to qualify you must of had $600 or more garnish from your paycheck within the 90 days leading up to the filing of your case. If you’re considering bankruptcy due to impending wage garnishment, or if you’ve just started having your wages garnished, you may want to consider waiting to file until you hit the $600 threshold. After all, if you’ve had $599.00, it is probably a good idea to wait and allow your creditor to garnish one more paycheck so you break over the $600 line. This way, with the help of your attorney, you can recoup funds from the creditor who has been reaching into your pocket.
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