When you are already short on funds, there is nothing worse than realizing that you are receiving less of your paycheck or missing funds in your bank account because of debt collectors. Sometimes you don’t even realize garnishment is happening until a check bounces because of insufficient funds or you try to take money out of an ATM and see your balance.
The realization makes you sick to your stomach, overwhelmed with anxiety. Let our Nebraska bankruptcy attorneys help you to understand what has happened and what you can do to take control of your money again.
What is Wage Garnishment?
Your paycheck can be garnished when a court orders that money be withheld by your employer to pay a debt (i.e. child support). The law limits how much can be garnished from your pay at one time and protects you from losing your job over a garnishment. Your bank accounts can also be garnished and sometimes both are garnished (or have money taken out of them) to pay the same debt.
What is Bank Garnishment?
Your bank accounts may also be garnished when a judge issues an order allowing debt collectors to take money from your accounts to pay outstanding debt. Sometimes both your paycheck and bank accounts can be garnished for the same debts. This is very stressful as your bills still need to be paid and you still need money for gas so you can get to work!
Do I Have to Be Notified Before a Garnishment?
When a creditor files a lawsuit to collect a debt, they must serve you with a copy. Certified mail is the most common method. Some judges don’t require that you sign the receipt. If the mail isn’t picked up, the sheriff or process server will serve you (or even another member of your household) at your home. If both methods fail, the collection agency can publish notice in the newspaper. When a creditor requests to garnish, notice is sent to your last known address and your known employer.
Can I Be Garnished Even if I Wasn’t Notified?
Unfortunately, the law lets a creditor file a garnishment, and then wait 7 days before sending a copy by certified mail to your last known address. No receipt is required. If you haven't received notice, the best place to look is through recent paperwork from your employer or your bank.
What Do I Do When I Receive the Notification of Garnishment?
Your employer may have handed you the notice telling you your paycheck is going to be garnished or you may have gotten a letter in the mail. Either way, now that you’ve received it, what do you do? Along with the letter, there will be a list of questions called “Interrogatories” that ask you:
- Are you the head of your household?
- Do you have dependents? If so, how many?
- Do you make less than $900 a month?
- Does all your income come from Social Security?
Answering “yes” to any of these questions may trigger the court ordering a hearing to make sure the proper garnishment percentage is set. This objection MUST be filed within 3 days of receiving the garnishment summons. Fill out the forms, sign them, and file them in person with the clerk of the court that issued the garnishment.
If all your income comes from Social Security, the creditor cannot garnish your income. If you are paid by an employer, the answers to the other questions will help to determine what percentage of your paycheck they can garnish. It is not a matter of whether you will be garnished at this point, but when you will be garnished and how much will be taken from your paycheck and/or bank accounts.
What Can I Do to Protect My Money from Garnishment?
You may not have been garnished yet, but your creditors have been threatening to take you to court. Here are some things you can do to protect yourself.
- Ask to Receive a Paper Check – instead of having your paycheck direct deposited into your bank account, ask your employer to write you a paper check. Then, after you cash the check, you can pay your bills with cash or money orders. While this won’t keep the creditor from getting money from your paycheck, they won’t be able to garnish it a second time when the money hits your bank account.
- Purchase a Prepaid Debit Card – if your employer will not cut paper checks, you can purchase a prepaid debit card. Once you have purchased the card, the creditor will not be able to get any money from it since it isn’t connected to any checking or savings accounts.
How Do I Stop a Garnishment?
If you are already being garnished, there are only a few options to stop the garnishment.
- Pay Off the Debt in Full – likely if you had the money to do that, you wouldn’t be dealing with this headache to begin with, but it is an option. Perhaps, a friend or a relative can help you to pay off the debt.
- Object to the garnishment by marking the garnishment summons and returning it to the court – when you receive a notice of garnishment, you have 3 days to mark the document and return it to the court to object to a higher garnishment percentage or show your income is only social security.
- File Bankruptcy – once your bankruptcy is filed, our Nebraska bankruptcy lawyers will petition the court to stop the garnishment. This can take some time, so it is important to contact us quickly.
Can I Get My Money Back?
If you’ve been garnished, your biggest question is, “Can I get my money back?” Steffens Law Office has had great success in obtaining reimbursements of garnished funds from collection agencies for our clients. In bankruptcy, similarly situated creditors are all to be treated the same by the person filing bankruptcy. If one creditor has received payments, because of a wage or bank garnishment, or both, in the ninety days prior to filing bankruptcy, and those payments total $600 or more, the collection agency can be forced to give back those monies.
If the person filing bankruptcy has sufficient Nebraska bankruptcy exemptions to protect those garnishment monies, the lawyers with Steffens Law Office can, and will, recover at least a portion of those funds from the collection agency and put the money back in your wallet.
If you are considering filing bankruptcy and have been the victim of a garnishment action, please contact us for more information. While not all Nebraska bankruptcy attorneys provide this service, we will be happy to vigorously pursue and recover those garnished funds for you.
What is the Process to Stop the Garnishment and Get My Money Back? How Long Does It Take?
A bankruptcy will protect you and help you get money back in several ways. When your bankruptcy is filed in federal court, then we must provide proof of the bankruptcy to the county court that ordered the wage garnishment. The county court judge must accept the proof and sign an order directing your employer to stop taking the garnishment out of your paycheck. Our office will fax the signed order to your employer after the county court sends it to us. Your employer’s payroll department must receive the signed order before they process your paycheck, or the garnishment will still come out. Some judges work in multiple counties, and it may take time to get a hold of them to sign the order. Until all these things happen, your paycheck may continue to be garnished.
Is Any of My Money Safe?
Some of your money may not even be able to be garnished. For example, if all your income is from Social Security (SSI or SSDI) or from other government benefits. Also, if money in a bank account with your name belongs to someone else. This might be the case if your child’s employer direct deposits their check into a joint bank account. The bank may have required that you be listed on the account with your minor child, but all the money within the account belongs to them.
There is also an exemption that may protect some of your money from being garnished. This exemption is called the “Wildcard Exemption” and it protects $5,000 of your personal property in bankruptcy. This means that if you have money in your bank account, we may be able to use the “Wildcard Exemption” to protect it from creditors.
What Do I Need to Do?
- Review, sign, and send your bankruptcy paperwork to our office as soon as possible, preferably at least three days before your employer calculates payroll.
- Provide Steffens Law Office with the fax number of your employer’s payroll department along with your paperwork.
- Please be realistic—unless your bankruptcy is filed 3 to 5 days before you are paid, the garnishment may come out of your paycheck one last time. Rest assured, however, if your bankruptcy is filed before the garnishment payment is received by the creditor, the creditor can’t keep the money and must return the check. You’ll receive a refund back from your employer in a couple weeks.
Our Experienced Bankruptcy Attorneys in Nebraska Can Help
Wage garnishment is one of the worst aspects of debt, and creditors usually have the law on their side. Sometimes these lawsuits sneak up on you, especially if you recently moved or you weren’t looking for it in the mail. It can be impossible to fight a wage garnishment without a bankruptcy, but that’s what we’re here for.
Our Nebraska bankruptcy attorneys at Steffens Law Office are eager to fight for you and help you return to a life of financial freedom. If you have questions about wage garnishment or are wondering if bankruptcy is right for you, give us a call today at (308) 872-8327. You don’t need to do this alone. We have your back!