We have several clients contact us who are facing an upcoming wage garnishment, or currently are having their wages or bank accounts garnished. A garnishment means that a creditor who has a judgment is reaching in and taking money from a debtor. Generally in Washington up to 25% of your paycheck can be garnished! A huge benefit of filing bankruptcy when you are facing a wage garnishment is the “automatic stay” that goes into place immediately when the case is filed. This stay puts a stop to all collection activity, including garnishments and applies both in Chapter 7 and Chapter 13 bankruptcy cases in Washington. If there is an ongoing wage garnishment it is important to let your attorney know and provide he or she will your payroll contact information so they can notify them to stop the garnishment as soon as the bankruptcy case is filed.
If you have been garnished over $600 within the 90 days of filing in Washington you may be able to recover some or all of those funds. To do this, your attorney must properly disclose this as a potential asset to be recovered and apply the correct exemption for the recovery. An experienced Washington bankruptcy attorney should be able to advise you on whether it will be possible to recover any garnishments after your case is filed.
Typically, once a case is filed we will send a notice of filing (which we obtain immediately with electronic filing) to our client’s payroll office with clear instructions that all pending garnishments must stop. Most payroll professionals understand that bankruptcy will stop the pending garnishment. However, some employers will require a release of garnishment from the creditor who holds the judgment. We can typically get this quickly from the creditor because they do not want to violate any bankruptcy laws. If your bankruptcy case is filed, and the creditor ends up receiving post-bankruptcy earnings, we can also retrieve those. Again, most creditors will turn this over fairly quickly because they don’t want to run afoul of the automatic stay and be subject to penalties, attorney fees, etc.
If you are currently facing a wage garnishment, or believe you will be in the near future it is critical to speak to a bankruptcy attorney as soon as possible. You don’t want to risk a creditor garnishing up to 25% of your net income. For help with garnishments, call us today at 360-213-2722.