If you owe money to a creditor, like a credit card company, a bank or hospital, the creditor has a right to sue you for the money if you fail to pay them back. It is not enough to simply file a law suit against you, the creditor must obtain a judgement from a court having jurisdiction over you stating that you do, in fact, owe the money.
Once a creditor has a valid judgment in hand, they may ask for an order to garnish your wages, your bank accounts and/or your tax refunds. An order for garnishment allows the creditor to seize your money from savings and/or checking accounts, paychecks and tax refunds until the amount owed is paid in full.
If this is happening to you, you can do a few things to protect your assets.
First and foremost, you can file a bankruptcy petition in the state where you live. There is a U.S. Bankruptcy Court representing every geographic area in the country. For instance, if you live in the Upper Peninsula of Michigan, you would file your petition with the U.S. Bankruptcy Court of the Western District of Michigan. The court is physically located in Marquette, MI. Filing a bankruptcy petition creates an automatic stay stopping all attempts to enforce judgments such as garnishments, lawsuits and property seizures.
If you intend to file bankruptcy, you may want to hold off on filing your state tax return until after the petition is filed. Most garnished tax refunds are from state taxes. If you delay filing your state return until after you file your bankruptcy petition, the automatic bankruptcy stay will protect your state refund from permanent seizure.
Another option is not to keep funds in any bank account that could be subject to garnishment. A creditor can only seize the money that’s in the account. If there is no money in the account, there is nothing to seize.
If your wages are being garnished, filing bankruptcy will stop the garnishment.
If you live in the Upper Peninsula of Michigan and are facing garnishment, you are not alone. The attorneys at Church and Korhonen are available to discuss your situation and advise you if you qualify for bankruptcy. Call today and stop the garnishments.