San Francisco Bankruptcy Attorney | Wage Garnishment

Your San Francisco bankruptcy attorney can stop wage garnishment upon filing bankruptcy. When a bankruptcy petition is filed, there is an automatic stay that prohibits further collection activities, including wage garnishment. Accordingly, all garnishment and collections activities must cease as soon as the petition is filed.

Further, under bankruptcy law, transfers of property by the debtor to a creditor in excess of $600 within 90 days of filing a petition are avoidable as preferential transfers. As such, if in the 90 days before you file, your wages were garnished for more than $600, you are entitled to recover those funds.

Below is a typical scenario, but it is advisable to consult with San Francisco bankruptcy attorney about the specifics of your case:

David is sued by plaintiff credit card company for $10,000 for an outstanding, unpaid credit card. The credit card company serves David with a complaint for a failure to pay on the account. David does not respond to the complaint, and the credit card company obtains a default judgment making it the prevailing party.

To garnish David’s wages, the credit card company would file and serve a writ of execution, and then an application for earnings withholding order. The order granting the application for withholding earnings is served on David’s boss, who then must withhold some of David’s pay.

How much pay or wages can be garnished in California? 25% of net pay for a civil judgment, and up 50% for child support. Assume that David grosses $4,000 per month. After taxes, David nets $3,200. Plaintiff credit card company is entitled to garnish up to 25% of David’s net income, i.e., $800 per month until the judgment is satisfied. A $10,000 judgment will take a little over a year in garnishment given the amount of the judgment and fees.

If after six months of wage garnishment David files for Chapter 7 bankruptcy, he could recover the previous 90 days of wage garnishment, i.e., $2,400. Since this exceeds $600, David would be entitled to recover all $2,400.

Note that garnishment for back taxes, alimony and child support cannot be stayed, and that a debtor cannot recover the previous 90 days of such garnishments. Contact a San Francisco bankruptcy attorney from JC Law Group to discuss stopping wage garnishment.

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