In this blog, we will look at how filing Bankruptcy can stop the enforcement of a judgment. If a creditor sues you and obtains a judgment they can enforce it by putting a lien on your wages (this is also known as a wage garnishment) or by levying your bank account. Once a creditor gets a judgment against you, that judgments can last for up to 20 years! it is important to speak to a wage garnishment lawyer to help you determine your next best steps.
How do Creditors Obtain a Judgment
Many individuals who are behind on their credit card bills are served lawsuits by debt collectors. Many times people fail to answer these lawsuits in hopes that the creditor will go away. Unfortunately, creditors will not go away no matter how much you try to ignore them. When you don’t answer these lawsuits initiated by your creditors, they can obtain a default judgment against you. A default judgment is a judgment entered because you didn’t appear or show up to court. These judgments can last up to twenty years.
When this happens a wage garnishment can be initiated. A wage garnishment tells your employer that they must withold a certain amount of money from an employee’s check. This money will then be sent to the creditor to satisyfy the judgment.
Creditor’s lawyers will find out where you work by sending an employer an information subpoena. This requires an employer to answer questions about the employee. Within the questionaire they will find out how much you work, how much you make, how you are paid etc. Employers are required to fill out these information subpoenas otherwise they can be held in contempt.
The creditor will then send an income execution form from the City Marshal or City Sheriff. This is a letter that is sent to both you and your employer, requiring you to pay the marshal or sheriff otherwise your income will be levied.
How Much Can a Creditor Garnish My Wages?
The creditor can garnish the lesser of 10% of the debto’s gross wages or 25% of their disposable income to the extent this amount exceeds 30% of the minimum wage. If your income is less than 3o times the minimum wage than they won’t be able to garnish your wages at all.
Keep in mind that if you are behind in child support, unpaid taxes or student loans the creditor won’t be required to sue you in court first. This means they can automatically begin garnishing your wages.
How Does A Creditor Put A Levy on A Bank Account
Once a creditor obtains a judgment, they have the right to take money directly from your bank account. This means that any money you put in, your creditor can withdraw to pay your outstanding debt. This means you won’t be able to pull the money you put into your own bank account, only your creditor will be able to withdraw the money.
You are probably wondering how a creditor will take the money from your account. A creditor must be to identity the bank account they want to levy. They will send an information subpoena to the banks and find out where you have accounts. This is very easy for most debt collection firms as they do it all the time. The credior will then serve a restraining order on the bank and if it looks good the bank will mark the account as frozen.
Not everything that goes into a bank account can be frozen. Some types of income that creditors can’t freeze are
- Child Support
- Alimony
- Social Security
- Unemployment benefits
- Disability benefits
- Workers Compensation
- Public Private pensions
- veterans benedits
How to Stop a Judgment by Filing Bankruptcy
To stop a Judgment from being enforced, you can file a Staten Island bankruptcy or a New Jersey Bankruptcy. A bankruptcy petition can immediately stop a creditor from being able to collect any money against you. When an individual files a bankruptcy petition in Bankruptcy Court an automatic stay is initiated. The automatic stay prevents any creditors from coninuing any collection efforts. The Automatic stay is deemed one of the most powerful tools when filing bankruptcy. The automatic stay prevents any creditor who could have started any action against you from filing anything in court before the bankruptcy was intitiated.
This means the automatic stay will stop any garnishments and remove a bank levy as soon as the bankruptcy is filed. You would only have to show proof of the bankruptcy filing to the creditor for the bank levy or wage garnishment to stop. Any funds that were frozen and are still being held in the bank account should be available to you as soon as the bankruptcy is filed. Further, any money that is garnished after the bankruptcy filing will need to be returned.
Once your bankruptcy is completed, you will get a discharge. The bankruptcy discharge will eliminate your debt so that you no longer owe any of these creditors or collection agencies. If any creditor tries to collect on any debt that was discahrged in a bankruptcy they can be sanctioned.
Keep in mind, that although many judgments can be discharged, there are some debts that can’t be. Some of these types of debts include
- government fines
- certain taxes
- debts acquired by fraud
- student loans
- criminal penalties
- debts related to drunk driving
What Should I Do if I am Being Sued by a Creditor?
If you are being sued by a creditor in Staten Island , New York or New Jersey don’t ignore it. The worst thing you can do is ignore a lawsuit from a creditor. Many people are surprised to see someone levying their bank account years later. As the judgment continues to go unpaid, taxes, fees, penalties, and interest will be accruing. This can make an original judgment amount double or triple. Moreover, if you own property, a judgment can turn into a lien on a home. Most title companies will not allow you to close when you go to sell your home, if the judgment is attached as a lien on the home.
The best thing you can do if you are sued, is speak with a Staten Island bankruptcy lawyer or debt lawyer or speak with a New Jersey bankruptcy lawyer that can help you. A bankruptcy lawyer or wage garnishment lawyer will be able to assess your situation and go over different options that may be best for your financial situation.
Speak with a Wage Garnishment Lawyer
If you have questions about a lawsuit from a creditor, a wage garnishment, or a bank levy or about filing bankruptcy in Staten Island or about filing bankruptcy in New York or New Jersey you can contact Karra L. Kingston Esq. at 973-979-9078 or emailing us at karra@klkbankruptcylawyer.com