How to Stop a Garnishment in Bankruptcy

In this post, we’ll take a brief tour of how garnishments work, and then we’ll talk about how bankruptcy can put a stop to garnishments and creditor harassment.

Let’s go back to the start of the relationship. When you fill out a credit application, you’re not just auditioning for a credit card, you’re also agreeing to pay back any money you borrow by a certain date. If you don’t pay the entire amount back by the due date, then you’re charged interest. Interest charges are how creditors earn money. In some sense, they love it when you charge a lot of purchases but then only pay the minimum amount due, even though this involves the risk that they might never get paid back.

Indeed, this post is about what happens when you do not pay back the money you’ve essentially borrowed to make purchases.

First, a credit card agreement is a contract. Second, defaulting on the debt you owe to a credit card company is a breach of the aforementioned contract. Thus, once you’ve breached the agreement to repay the debt, the creditor (in this case, the credit card company) will either sell  the debt, continue trying to collect on its own, or initiate legal proceedings. It’s this last option I want to focus on today.

Okay, so the creditor may start threatening legal action.[Note: Under the law, they can’t threaten legal action unless they intend to sue you.] Assuming they do sue you for breach of contract and obtain a judgment, they can then obtain a writ of garnishment and start garnishing your wages.

The following rule spells out how much can be garnished from your paycheck.

RCW 6.27.150 (4):

In the case of a garnishment based on a judgment or other order for the collection of consumer debt, for each week of such earnings, an amount shall be exempt from garnishment which is the greater of the following:

(a) Thirty-five times the state minimum hourly wage; or

(b) Eighty percent of the disposable earnings of the defendant.

RCW 6.27.010 defines disposable earnings as “that part of earnings remaining after the deduction from those earnings of any amounts required by law to be withheld.”

It’s important to note that according to RCW 6.27.100, your employer does not have the option to ignore a writ of garnishment; they are, after all, a garnishee defendant. Additionally, the employment cannot fire you for having your wages garnished (see: RCW 6.27.170) unless “garnishments on three or more separate indebtednesses are served upon the employer within any period of twelve consecutive months.”

Now that you’re being garnished, you find a lawyer who files your bankruptcy petition. Once you’ve filed, you get the protection of the automatic stay, which is simple, but powerful rule, that prevents any further collect on debts. The very next task is to have your lawyer reach out to the garnishing creditor’s lawyer so that the garnishment writ can be released.

Your lawyer will obtain a release of write of garnishment. This release will be sent to the payroll department at your company, and they will refund post-petition garnishments.

The important thing here is that you work with an attorney who can communicate effectively with other attorneys. A fire-breathing attorney will not make things move quicker, and may even cause other parties to drag their feet, which is not something you want if money is tight.