Stop Wage Garnishment, Protect Your Employment
and Avoid a Budget Disaster
If you are facing a wage garnishment, Clark & Washington
can help you. When we file your Chapter 13 or Chapter 7 bankruptcy
petition, any pending garnishment (except for child support) will stop
immediately. Any funds seized after the date of your bankruptcy filing
will be returned to you.
State Court Judgments Can Result in
Significant Seizure of Your Income
In most cases, wage garnishments arise from lawsuit
judgments. Judgments come from lawsuits. For example, if a credit card
company filed suit against you for non-payment and you did not answer, a
default judgment would issue against you. If you were involved in
litigation and lost, a judgment would issue against you.
Our clients sometimes report that they were not even aware
of a pending lawsuit, much less a judgment. This type of unpleasant
surprise happens more often than you might think. Sheriff’s deputies,
who are responsible for serving the lawsuit, are permitted to leave the
lawsuit with an adult who answers the door to your house. We sometimes
see cases where a spouse accepts service but fails to deliver the
lawsuit papers to the named defendant.
In other cases, often involving credit card debt, the
cardholder agreement provides that payment disputes shall be referred to
an arbitrator out of State, or that a specific court in another State
shall be the venue for any collection lawsuit. These venue provisions
effectively mean that you have waived your right to defend a collection
lawsuit in your county. Some legal commentators argue that this type of
venue shifting is unconstitutional or illegal, but unless you have the
funds to mount a “collateral attack” against the judgment, you will be
stuck with it.
If your creditor possesses an out of State judgment, it can
“domesticate” the judgment in your home county. Once a judgment is
domesticated here, you will be subject to wage garnishment, bank account
levy and any other remedies otherwise available to a winning plaintiff
here in Tennessee.
Wage Ganishment Threatens 25% of
Your Net Pay and Possibly Your Job
Once a judgment has been issued, your creditor can ask the
local sheriff’s office for a “fi fa” and a summons for continuing
garnishment. Your employer will be served with this garnishment summons
and ordered to withhold 25% of your after tax earnings. In addition,
your employer may charge a handling fee for the extra paperwork involved
with fulfilling the garnishment requirements.
Be aware that your employer cannot choose to ignore a
summons of continuing garnishment. If your employer does not honor the
summons, your employer will become responsible for payment of the entire
debt.
As you might imagine, human resource and payroll
coordinators for most employers find wage garnishments troublesome for a
number of reasons. Firstly, your employer must expend time and effort
to complete the paperwork associated with calculating and processing
garnishment orders. Secondly, until the garnishment is paid in full or
otherwise released, your employer has potential financial liability if
there are errors with the paperwork. Finally, your credibility may be
called into question as a defendant found liable for a judgment in a
lawsuit. It would not be an understatement to conclude that your job
might be at risk if you involve your employer in your personal business
and wage garnishment.
Clark & Washington can stop any pending garnishment no
matter where you fall in the process. If you contact us before the
pending lawsuit against you goes into default, we may be able to avoid a
judgment from issuing. If a judgment has been issued, the judgment
creditor’s right to seize your wages terminates the instant we file your
bankruptcy case. Sometimes, money that has been seized can be returned
to you or it can be used to pay non-dischargeable debt like taxes.
Special Bankruptcy Motion to Avoid Lien
Protects Your Income in the Future
Because an outstanding judgment can continue to affect you
negatively, we also use the power of the Bankruptcy Court to eliminate
the judgment lien altogether. In many cases, we can file a Motion to
Avoid the Judicial Lien, which results in a cancellation of the filed
judgment against you. An order avoiding the judgment actually changes
your creditor’s status - the judgment will be canceled and your judgment
creditor will have no more rights than any other discharged unsecured
creditor. After your bankruptcy ends, your judgment creditors will be
discharged and lose any right to come after you again.
Summary: Judgments and wage garnishments function as
powerful tools used by creditors to seize your money. When we file your
bankruptcy case, your creditors are powerless to take any action and
they lose their right to seize your wages. You can file a bankruptcy at
any point in the pre-judgment or judgment process to put an end to
creditor action. Don’t wait until your wages are at risk - call Clark
& Washington as soon as you suspect any risk of wage garnishment.
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