When in a tight situation financially, it can get to the point where you thought you could manage or catch up and suddenly, your bank account has been cleaned out and your wages are being garnished. This can be completely devastating as it leaves the individual (and sometimes family) without any means of immediate support. They can be left without any money to function. Some who find themselves in this situation wonder if it’s too late to file for bankruptcy.
Will Filing for Bankruptcy Allow Petitioners to Get Money Back that Was Garnished?
This is a question that is best approached cautiously. The process for handling garnished wages is different depending upon whether the wages were garnished before or after you filed for bankruptcy. For wage garnishments that were completed prior to the bankruptcy filing, you have to consider the applicability of the law of “preferences.”
Generally speaking, bankruptcy’s focus is on the present and future – not the past. (This is particularly true with the Chapter 13 bankruptcy). But with the law of “preferences” there are certain circumstances where a creditor can be required to return payments or transfers after a bankruptcy filing. The point of this law is not to help out the filer, but to treat creditors fairly. When the payment or, in this particular discussion, garnishment, was processed shortly before bankruptcy filing, it can be seen as preferential treatment. That one creditor was able to access a chunk of funds to apply towards your debt, while other creditors did not receive the same privilege (or equal treatment).
Preference law attempts to keep the playing field even between the creditors who were able to get money from a debtor during the short time period before the debtor filed for bankruptcy and the rest of the creditors who did not. This is done by requiring that the creditor in receipt of the funds pay the money back so that all the creditors can have an equal share in it through the bankruptcy process.
Think of it this way. It’s like when one child at the family table is overexcited and grabs the entire cake plate before the rest of the family is done eating dinner. The parent would probably respond by taking it back and advising them that the dessert is for the entire group to share and then dividing it up with everyone getting their piece of the cake.
If you have additional questions about wage garnishment, the law of preferences or getting garnished wages back after filing for bankruptcy, please contact one of the southern California bankruptcy attorneys at Westgate Law today.