top of page
What is a Wage or Bank Garnishment in California?
In California, a wage garnishment is an order that requires your employer to turn over a portion of your wages before paying your salary. The order can come from a court or a government agency. A bank garnishment is similar, except the money in your bank accounts is frozen and turned over to your judgment creditor.
Typically, a creditor must sue you and obtain a judgment to garnish your wages or bank account. A judgment order will indicate the exact amount you owe. However, some exceptions do not require a creditor to file a lawsuit including, unpaid income taxes, outstanding court-ordered child support, or defaulted student loans.
In a situation where a creditor does obtain a judgment, they will file for a writ of execution. A county sheriff will deliver the writ to either your employer or your bank. Once received, the writ must be honored.
Filing for Bankruptcy to Stop a Garnishment in California
Many people view bankruptcy as a last resort when dealing with creditors or garnishments. However, in most situations, filing for bankruptcy is the most efficient and fastest way to stop a garnishment.
If you attempt to work out a settlement agreement, your creditor will likely leave the garnishment in place during the negotiation. If your creditor will be receiving a substantial part of your paycheck or has direct access to your savings or checking account, they are in a powerful position. It is not uncommon for a creditor to leverage a garnishment for a more advantageous settlement agreement.
When you file for bankruptcy, a court injunction immediately goes into effect. This injunction, commonly referred to as an automatic stay, creates a legal wall between you and your creditors, prohibiting any collection actions against you. The injunction also prohibits garnishments. As soon as your case is filed, our California bankruptcy attorney will notify the sheriff, your employer, and any financial institution where your accounts were frozen. Additionally, should your employer or bank continue honoring the garnishment, they will be violating the stay in your bankruptcy case and will be subject to possible monetary sanctions.
Chapter 7 and Garnishments in California
While filing for bankruptcy will stop any existing garnishments, the chapter of bankruptcy you file will determine what happens next. Chapter 7 is the most common type of bankruptcy in California and is what people usually think of when they imagine bankruptcy. If a person qualifies for Chapter 7, they will eliminate most of their debt, including credit card debt, medical bills, and personal loans. If your debt is dischargeable through Chapter 7, your garnishment will no longer exist after your case is over.
However, there are some considerations that our experienced Folsom chapter 7 bankruptcy attorney will go over with you before filing. First, all debt is not dischargeable and some of that debt is subject to possible garnishments. For example, if your wages are being garnished for student loan debt, the garnishment will cease while your case is pending but will continue once your case is closed. In some situations, a creditor might file a “motion for relief from stay” to allow them to pursue their legal rights. Because the debt is not dischargeable, you probably lack a defense to this motion.
Another consideration, especially if the garnishment is against your bank account, is your nonexempt property. When you file for bankruptcy, all your property, including your bank accounts, become part of the bankruptcy estate. If you are unable to protect your bank accounts through California’s bankruptcy exemptions, a court-appointed trustee is entitled to take possession of the funds in your account and distributed them among your creditors. In cases where a substantial amount of property is nonexempt, our office might advise filing for Chapter 13.
Chapter 13 Bankruptcy and California Garnishments
Chapter 13 is a reorganization of your debt. When you file for Chapter 13, you will propose a bankruptcy plan to pay back your creditors. Which creditors are paid and how much they receive depends on various factors, including the type of debt, your income, and your nonexempt property. Our Folsom chapter 13 bankruptcy attorney will thoroughly evaluate your situation and draft a plan that complies with the Bankruptcy Code.
Chapter 13 will stop all wage and bank garnishments. The difference in Chapter 13 is you will have a mechanism to pay the debt that is not dischargeable. For example, if your wages were garnished because of unpaid taxes, you will be permitted to pay your tax liability over five years and not be subjected to a wage garnishment. In some cases, the amount you pay will be less than the total you owe because a portion of the tax debt might be dischargeable.
bottom of page