QUESTION

Will bankruptcy prevent my wages from being garnished?

Asked on Feb 22nd, 2011 on Bankruptcy - California
More details to this question:
My daughter has just gone through a divorce, was awarded custody, and has finally secured a job. Her car now needs a new engine to the tune of $7,500 and the dealership will not honor her extended warranty, claiming routine maintenance was not kept up. She owes $16,000 on the vehicle. If the car is voluntarily allowed to be reposed will her wages be garnished? Should she file for bankruptcy to protect herself? If so would that come first and then the repo?
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6 ANSWERS
Answered on Feb 27th, 2011 at 3:08 PM
Yes, if an individual files bankruptcy, this will prevent his or her wages from being garnisheed. If the wage garnishment has already started, the filing of a bankruptcy by the debtor will stop it. Before a creditor can garnishee a debtor's wages, the creditor must file a lawsuit and obtain a judgment. I need more information to help you and your daughter determine whether or not your daughter should file bankruptcy. This information includes detailed information regarding your daughter's assets, debts, income and expenses. Please call me.

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Answered on Feb 23rd, 2011 at 2:02 PM
Yes, bankruptcy stops garnishments. Your daughter may wait until she is sued and file before the judgment can be obtained or do it now. She needs to discuss that with a bankruptcy attorney to see when would be the best time to file and if she should file at all and what chapter would be best. To garnish wages the creditor must first have a judgment and to have a judgment she needs to be sued and either default (not answer the complaint) or lose the case at trial.

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Answered on Feb 23rd, 2011 at 2:02 PM
Yes, it will prevent your wages from being garnished.

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Answered on Feb 23rd, 2011 at 1:47 PM
If you let the car be repossessed, the bank will sell the car at an auction and bill her for the difference between what was paid and the amount she owes. The amount paid at the auction is usually very low as people are always looking for bargains, but if a third party doesn't buy it, the lender holding the lien on the car will credit-bid (pay for the car using the debt your daughter owes to it). In other words, there is a deficiency almost invariably. Once the lender does that, it will start trying to collect from your daughter. If she doesn't pay, the lender may itself start a lawsuit to collect or may first sell the debt to somebody else who will start the collection process again and ultimately file a lawsuit against your daughter for the deficiency plus attorneys' fees and costs, etc. Once the lender wins, it can get a judgment against your daughter and have the Sheriff start garnishing her wages. A Bankruptcy filing does stop garnishment proceedings and the benefits are maximized if the petition is filed more than a week before her employer starts taking the money from her check and sending it to the sheriff. With that said, she needs to consult an attorney as soon as possible to determine whether a bankruptcy filing is even a good option for her despite the fact that it stops a garnishment. For example, sometimes people have several hundred thousand dollars of home equity, which may force them to pay their debts in full. Of course, since the possibilities are endless, it is best to consult a bankruptcy attorney well in advance to determine how to proceed. Some attorneys offer a free initial consultation.

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Answered on Feb 23rd, 2011 at 1:47 PM
Yes, it will.

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Answered on Feb 23rd, 2011 at 1:47 PM
Wage garnishment is a means of enforcing a judgment. If you daughter surrenders the vehicle and the lender realizes an amount less than what is owed, it may sue her for the difference. If the lender wins in court and obtains a judgment, at that point it may seek to enforce the judgment using a variety of different means, including wage garnishment. A bankruptcy discharge will absolve her of personal liability for the debt. Whether she surrenders the vehicle and then files bankruptcy, or surrenders the vehicle in connection with the bankruptcy proceeding makes little difference. She should probably contact the lender and see if she can reach some kind of agreement with them before filing bankruptcy.

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