Many people come to my office after having suffered through one, two, or even three garnishments. The truth is that the vast majority of people would prefer to pay their bills instead of filing for Bankruptcy. Therefore, despite how disruptive a wage garnishment can be, many people accept the garnishment as an unfortunate solution to paying back a debt.
This can be a huge mistake for a number of reasons. First, any wage garnishment will add additional costs and fees to the debt that you owe that creditor. Sometimes the interest, fees, costs, and additional attorney's fees can be close to the amount that is being deducted from your pay check which means that it will take forever to pay off the debt. Even if the debt is small, you will pay substantially more than what was owed if you choose to let a wage garnishment be the vehicle to pay the debt back.
Second, leaving a wage garnishment in place only invites more garnishments. In any location, there are only a handful of attorneys and collection agencies that specialize in wage garnishments. These companies and law firms will regularly pull records on targets of debt collection, and they will contact other people that you owe money to and either buy the debt or seek to work that account, since they already have all of your information.
Lastly, while suffering through a wage garnishment might seem like you are addressing, at least one of your problems, the truth is that you need to do a proper analysis on ALL of your debt. It is tempting to simply address the creditor that is the most loud and aggressive, but the truth is that you owe ALL of your debts, even the ones that you haven't heard from recently. If you can afford to make meaningful payments in a frequency and amount that will result in you paying off your unsecured debts within one to three years, then you should make a plan, stick to it, and pay off your debts without filing for Bankruptcy.
On the other hand, if you cannot realistically pay off all of your debt within a three year time frame, then you should explore your options to wipe out your unsecured debts with a Bankruptcy filing. This will not only eliminate most (if not all) of your unsecured debts, like credit cards, and medical bills, but it will also stop a wage garnishment, and in some cases, can result in returning some of the garnished funds back to you.
The attorney's fees associated with filing a typical Ch. 7 Bankruptcy case are far less than the attorney's fees associated with fighting a wage garnishment or a civil suit in court. If you are having your wages garnished and you choose to file for Bankruptcy, there are a couple of things to keep in mind.
If the money is still sitting with your employer and has not been distributed yet, then filing for Bankruptcy should result in all of that money coming back to you. If the money has been sent off to the creditor by your employer, you can recover garnished funds as long as they were at or more than $600 in the last 90 days. So if, in the last 90 days, you were garnished less than $600, sometimes waiting to file until the amount exceeds $600 is a good idea. Also, you need to list the garnished funds on your Schedule B, and exempt that amount on your Schedule C, or the recovered garnished funds will belong to the Ch. 7 Trustee.
While all of that may seem a bit technical, the point of it is that oftentimes filing for Bankruptcy is a cheaper, faster, and more complete solution to collection activity, especially a wage garnishment, than other options. In the short term, simply riding out a wage garnishment might seem like a good idea, but if you eventually are forced to file for Bankruptcy, that was simply wasted money that could have gone to help your family.
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