Wage Garnishment After Filing for Bankruptcy - Westgate Law

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Wage Garnishment After Filing for Bankruptcy

bankruptcies, filing for bankruptcy, file for bankruptcy, filing bankruptcy, westgate law, southern california bankruptcy attorney, wage garnishment, wage garnishment after filing, filing for bankruptcyNo one likes his or her wages to be garnished and everyone wants money that was garnished to be returned. Those are just the facts. But depending on when your wages were garnished, what stage of the transfer process the funds were at when they filed, and whether or not certain motions are filed, you may or may NOT be able to get your garnished wages returned due to bankruptcy.

Did that sound unnecessarily vague and convoluted? I’m sorry, that is a pretty accurate description of the wage garnishment process.

First off, the details may vary by state. In California, if you had wages garnished prior to filing for bankruptcy, you probably won’t get them back. It’s more likely that the funds will end up at their original final destination: the law firm or collection agency that executed the garnishment.

If your wages are being garnished at the time that you file for bankruptcy protection, that is when the creditor was notified. When they received the notification of bankruptcy, the creditor on whose behalf the wage garnishment was executed sends a notification to the sheriff’s department to terminate the wage garnishment. The sheriff then turns around and notifies your employer of the termination and your employer will then stop deducting money from your paycheck. At this point, sheriffs send notice to the debtor and the debtor’s attorney (this particular step may not occur depending upon your state of residence, but it does occur in California).

In the letter the sheriff sends to you and your attorney, it states that the funds are being held. It also states that unless there is a bankruptcy court order, the specified funds will be sent along to the creditor upon the close of the bankruptcy case.

You bankruptcy attorney can use this letter to file a motion with the bankruptcy court stating that the funds are protected as an asset of the bankruptcy petitioner’s estate. Once the funds have been designated as an asset protected through bankruptcy, the sheriff is then allowed to turn over the funds – returning them to the employer. The employer can then return them to the bankruptcy petitioner whose wages were garnished. This process typically takes between 30 and 45 days to complete. During that time, the sheriff holds the garnished wages. When the motion is successful, the bankruptcy court judge actually signs an order stating that the funds are protected and should be turned over to the debtor or bankruptcy petitioner. This is the order that you bankruptcy attorney should send to the sheriff that can result in the return of your garnished wages to your employer, and eventually, to you.

Again, the process may vary depending upon your state of residence, but this is the procedure in place in the state of California. In some states, the bankruptcy trustee assigned to your case may file the motion to designate garnished wages as a protected asset of the case. In other cases, the money help by the sheriff cannot be protected by bankruptcy. The motion is filed by the trustee who then receives the funds from the sheriff and the trustee then includes the funds in the assets distributed amongst the bankruptcy petitioner’s creditors. In this case, wages that have already been garnished are simply gone and the debtor would have to move on and focus on the eventual discharge of all remaining debt at the close of their bankruptcy case.

If you have questions or concerns regarding bankruptcy or wage garnishment before or after bankruptcy, please get in touch with one of the southern California bankruptcy attorneys at Westgate Law.

About the Author

Justin Harelik

Justin has a singular goal: to get people out of financial distress and move them to financial stability and prosperity. He does this by combining 15 years of in-depth experience in bankruptcy, credit management, debt negotiation and student loan modifications, and he does it with both English and Spanish-speaking clients.

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