Stop Garnishments and Lawsuits Phoenix Bankruptcy


How to Stop Garnishment

If you are considering bankruptcy, you are certainly the target of debts that you cannot pay, and the harassing phone calls that go with it.  You might even be facing a wage garnishment or a lawsuit.  Let's look at how a wage garnishment works, and how to stop it.

How to Stop a Lawsuit

A lawsuit sounds big and impressive, especially on TV.  However, all it means is that creditor is asking the court to agree that you owe the money.  That's ok.  You probably do owe the money.  Even you agree that you owe the money.  They cannot fine you, or put you in jail, just because you did not pay a debt.  The only thing the court can do is give the creditor a judgment.  The judgment just means that you owe them money.  That's all.

I Never Got Served

Don't I have to get served before they can have a lawsuit or a judgment?

Yes.  You have to be served in order for the court to rule that you owe money.  What that means is that someone has to come to your home or office, or find you personally, and hand you personal service saying you have been sued.  However, the creditors have found many ways around this.  The creditor will tell the court that you cannot be found.  The creditor will ask the court to leave the service at your last known address, or publish it in a newspaper.  This sounds dirty, because it is, and so are creditors.  Do you still feel like you should pay them back?

Once the creditor has published notice in a newspaper you have never heard of, the court will let them take a judgment.  In most cases, you will never know you have been sued.  This makes it easier for the creditor in a lot of ways.  You no longer get a chance to say the debt is too old, or even to say the creditor has to prove what he claims.  Without a defense from you, the judgment is pretty easy to get.

What Happens After I Get Served?

If you actually do get served, you have a specific amount of time to defend the lawsuit.  You can simply deny the allegations and tell them they have to prove it.  You can say that the debt is too old.  Saying you cannot afford it is simply not a defense.  If you say you cannot afford it, or that you have tried to pay it, the judge will award the judgment.  All that matters to the court is if you factually owe the money.

How Long After Lawsuit Will the Creditor Garnish?

After being served, you have 20 calendar days in Arizona to answer.  If you do not answer, you get another ten days before they take a default judgment.  You have 30 days to do something about the lawsuit.

What Happens with a Creditor Collection Judgment?

If you get sued, the creditor must think they have enough evidence to prove you owe the debt.  If this is the case, the court will award a judgment.  With a judgment, a creditor can take your property.  The easiest way to get money, is garnishment.


How Do I Get Garnished

In order to get garnisheed, a creditor has to sue you, and get a judgment.  You may or may not have notice of any lawsuit, as described above.  Sometimes, there is no need for a lawsuit.  For example, child support, taxes, or student loans can just garnish your wages without any authority of the court.  If you are worried about collections from student loans, child support or courts, or taxes, you might get garnished without a lawsuit.  Otherwise, a creditor will have to take a judgment against you to garnish.

How Much Can a Creditor Garnish

25% of your gross wages in Arizona.  That will probably be more like a third of your check.  You can claim hardship and ask that it be reduced to 15%, but they are still going to garnish.  This is the only opportunity for anything good to come from you trying to pay your debt.  You can claim you simply cannot afford it, and the court might reduce it.  Regardless, garnishment is still going to create a hardship for you.

How Do I Stop Garnishment

Bankruptcy.  Immediately when you file bankruptcy, you will get a bankruptcy filing number.  Along with that bankruptcy filing number, the federal bankruptcy court issues what they call an "automatic stay."  This is the court telling the creditors like they are dogs to, "stay."  None of the creditors can do anything to collect any debt until the court says so.  This even includes people who cannot be discharged in bankruptcy like student loans.  Once you file bankruptcy, the automatic stay is in place, and everything stops.  Garnishment stops, immediately.  Short of quitting your job, nothing else stops garnishment as well as bankruptcy.

How Do I Stop Student Loan Garnishment

A student loan garnishment is stopped by filing bankruptcy.  The "automatic stay" is granted by the bankruptcy court immediately upon filing bankruptcy.  The automatic stay applies to all creditors, even student loans.  The student loan garnishment will stop.  However, absent a special action, student loans cannot be discharged in bankruptcy.  Therefore, if you still have student loans left after bankruptcy, which you probably will, you will not have protection from them collecting again.  They may still garnish you after the bankruptcy.  A bankruptcy will temporarily stop a student loan garnishment using the automatic stay.  However, when the automatic stay goes away after the bankruptcy, there is no protection from student loan garnishment again.

Does Bankruptcy Stop Garnishment

Bankruptcy immediately stops garnishment.  Bankruptcy stops garnishment right when you file.  When you file bankruptcy, the court issues an "automatic stay." The automatic stay prevents anyone from collecting debt, and it applies to everyone.  Consequently, bankruptcy stops garnishment immediately.

Does Bankruptcy Stop a Lawsuit

Just like bankruptcy stops garnishment right away, it stops a lawsuit right away, too.  A lawsuit to collect a debt is covered by the "automatic stay" that is granted by the bankruptcy court when you file a bankruptcy.  The automatic stay stops a lawsuit the same way it stops a garnishment.  If you file bankruptcy to stop a lawsuit before it becomes a garnishment, there is one less public collection document for your credit report to see.  The lawsuit, as well as the judgment and the garnishment are all public documents.  The less negative public collection documents, the better.  Therefore, file bankruptcy to stop a collection lawsuit before it becomes a judgment or a garnishment.

How Do I Stop Garnishment With Bankruptcy

Filing bankruptcy is a pretty straightforward process.  We can help you do it with, or without an attorney.

You will first have to take the Creditor Counseling Class.  This can be done online and should only take about an hour.  There is usually a small fee to take the class, unless you try to waive the fee.  If you apply to waive the fee, you will have to wait a long time for a decision, and then it might not get granted.  You are probably better just paying the ten dollars.

In addition to taking the first bankruptcy class, you will have to gather a bunch of documents.  Essentially, the documents you will need are bank statements, pay stubs, and taxes.  There are many other documents that your trustee might request, but to get the bankruptcy filed, you can get by with these three.

Once you have done both of these things, contact us.  We can help you file bankruptcy with a paralegal, or with an attorney.  CONTACT US LINK.