Law Office of Rick Morin, PC

One of the most powerful provisions of bankruptcy law is called the “automatic stay.” The automatic stay prevents your creditors from taking action against you once you have declared bankruptcy. But what happens if you have a continued garnishment of your wages even after you file for bankruptcy?

By law, your creditors are required to cease all collection activity immediately upon the filing of your bankruptcy case. For my clients that have wage garnishments or bank levies, I always send a notice to the creditor once the bankruptcy is filed. This is followed up by the official notification sent from the United State Bankruptcy Court. The official notice usually goes out about a week after filing. By doing this, it will be difficult for the creditor to say that they never received notice of the bankruptcy.

Not all creditors take appropriate action after receiving notice of a bankruptcy. Some creditors are lazy. Some creditors just don’t care. Some creditors are just too big and the bankruptcy notification gets lost in the shuffle. No matter the excuse, the result to the bankruptcy filer is the same — continued collection activity even after the bankruptcy.

Any post-filing collection activity can be sanctioned by the bankruptcy court. In most cases, I make an attempt to reach out to the creditor to remedy the problem. If the creditor is not responsive, I can file a motion with the bankruptcy court to sanction the creditor for its willful violation of the automatic stay.

If the conduct of the creditor is egregious, the court will often issue a penalty against the creditor. Yes, you read this right. In some cases, you can recover money from a creditor that flouted the bankruptcy rules!

Bankruptcy laws are written to protect both debtors and creditors. My clients always play by the rules, but not all creditors do. I have personally gone after creditors that haven’t followed the rules and won judgements in my client’s favor.

Don’t delay any longer. Call my office at (916) 333-2222 to discuss your bankruptcy options.