Recently, a man Mike approached our experienced MN Bankruptcy Attorneys at Kain & Scott with concerns about his paychecks being garnished. No fault of his own, Mike fell severely behind on medical bills after having surgery about a year ago. Because of the type of surgery, Mike has been unable to work a full 40 hour week since. Before the surgery Mike was an experienced electrician making very good money. Unfortunately, his surgery has prevented him from performing his trade as he once did. Since the surgery, Mike has only been able to earn about 30% of what he once did.
Over the past year, Mike has struggled to make his payments for the medical care he received. Like most of us, Mike paid what he could and tried to work out a deal with the hospital. For a short period, the hospital worked with Mike, but ultimately he was unable to satisfy the debt. The hospital finally told Mike he had to pay off the remaining balance or they were going to send him to collections. Because of his lack of income, he was unable to pay off the rest of what he owed. As promised, the hospital sent the remaining balance to collections. After months of harassing phone calls, Mike received a summons in the mail informing him of a lawsuit he was facing as a result of the outstanding debt. Shortly thereafter, a judgment was entered against Mike and his paychecks were garnished.
FACT: Once a judgment is entered against you, you may have up to 25% of your wages garnished. Regardless of how much money you make, 25% can have a detrimental impact.
Mike was beat down and reached his limit. Filing bankruptcy was against everything he stood for. He hated himself for having to even consider reaching out for help. Bravely, Mike called our office and spoke with a MN Bankruptcy Attorney. He took the first, giant, step towards getting his life back by setting up a free initial consultation.
Mike sat down with one of our attorneys for about an hour to discuss everything that was going on in his life. With countless emotions, everything from laughter to crying, our MN Bankruptcy Attorneys listened to Mike’s needs and were able to put together a plan to solve the problem he was confronted with. Despite Mike’s reluctance to discuss bankruptcy, he left his initial consultation saying, “I feel like I can actually sleep again at night”.
Given the judgment that was entered against Mike, there were a few things we recommended during his initial meeting. First, we recommended to move quickly on the getting the case filed. Generally, we like our clients to take as much time as they need in deciding to file. When wages are being garnished, however, we generally recommend you file bankruptcy sooner than later because of the potential for more garnishments taking place. Second, we recommended Mike keep making his house payment and car payment every month. In most circumstances, we can help our guests protect their homestead and vehicle so long as they keep making their payments. Now, if you’ve fallen behind on your house payment or car payment, don’t worry. We can help you with that.
FACT: After your case is filed, creditors are no longer allowed to collect on debts you owe them while you’re in bankruptcy.
Mike accepted our advice and we had his bankruptcy filed within five days. As soon as his case was filed, the company garnishing his wages received notification of the bankruptcy and immediately put in an order to stop garnishing his wages. Now, in some instances, your wages may be garnished after your bankruptcy has been filed. This typically only happens when you have a pay date shortly after your case is filed. Reason being, your payroll and/or HR department hasn’t had sufficient time to process the garnishment cancellation. If this happens, don’t worry. We will likely be able to get the money back for you.
FACT: Money garnished in excess of $600 within 90 days prior to filing bankruptcy may be recovered and given back to you.
Mike ended up having his wages garnished two days after his bankruptcy was filed. As mentioned, this was simply because of the timing of everything. We ended up getting the money returned to him shortly thereafter. At this point, the only other thing Mike was confronted with was having the judgment removed from his record.
FACT: Your liability on a judgment is discharged through bankruptcy, in most circumstances, but the judgment will remain on your record until additional steps are taken to remove it.
Removing a judgment from Mike’s record was important because it’s looked at negatively by future creditors. In a way, having a judgment on your record is a ‘black eye’. Creditors are reluctant to extend credit to individuals who have judgments on their record regardless of whether or not the underlying debt was discharged through bankruptcy.
We helped Mike with getting the judgment removed from his record and now he is judgment free.
It has now been about six months since Mike received his bankruptcy discharge. Mike and his family are doing much better now for a number of reasons. He is able to keep all of his paycheck, no longer has the stress created by creditors calling him non-stop, and his record is judgment free.
If you’re going through a similar situation, or just have questions about bankruptcy, feel free to reach out to a MN Bankruptcy Attorney at one of our 8 professional and convenient locations for their advice. Overwhelming debt can be extremely stressful, but getting help and solving the problem doesn’t have to be. If you’re ready to get your life back, give us a call.