Filing bankruptcy has many perks for individuals drowning in debt, but one of the best-kept secret benefits of bankruptcy is the ability to recover garnished wages. If you are unable to pay off your debts due to a diminished income or increased living expenses, your creditors may not have sympathy for your situation. Despite your already limited financial resources, most creditors will go directly to the source of your income—your employer—and request to have your wages garnished. The garnishment attorneys at Backus Law Group in Montgomery, AL, recommend filing bankruptcy before wage garnishment is enacted; however, even if your wages are already being garnished, our legal representatives can help you recover some, if not all, of the money taken from your paycheck prior to filing bankruptcy.
If you hope to recover garnished wages by filing bankruptcy, time is of the essence. You must file for bankruptcy immediately, as the sooner you do, the sooner the wage garnishment will stop. Next, consult with a Montgomery bankruptcy attorney who will dedicate their time to ensuring that you receive your garnished wages back.
Once you have filed for bankruptcy, you can petition to have the amount taken refunded to your account. However, in order to have that money refunded, the creditor must have cashed the checks from your payroll within the past 90 days. Any money taken prior to that 90-day period will not be refunded.
Because wage garnishment is a two-step process (the employer withholds the employee’s pay, then the withholdings are sent to the creditor), there is the very real possibility that your money was never sent to the creditor. If it were not, it would be a violation of the court’s injunction for the employer to send it out despite your bankruptcy. Your employer should return that money to you immediately.
In order to stop future garnishment and to recover already garnished wages, you must list your garnishment as a preference on the Statement of Financial Affairs and on Schedule B. You must also include it as an exemption on Schedule C of your bankruptcy petition. In brief, your garnishment is an asset that must be protected through your exemptions.
If, after you have completed all of the above, your creditors refuse to refund you, you have the option of suing the creditor. Again, it is important that you take steps to recover your garnished wages right away, as you only have the option to sue the creditor during the pendency of your bankruptcy; after that, you just have to hope that the creditor voluntarily returns the funds.
At Backus Law Group, we give each client the individualized attention they need and deserve. Wage garnishment and bankruptcy are two events that most people never dream of going through, yet they happen to the best of us. If you have had your wages garnished and hope to receive a refund after filing for bankruptcy, call (334) 265-0800 to schedule an appointment with our garnishment attorney today.