Will bankruptcy prevent my wages from being garnished? 20 Answers as of February 27, 2011

My daughter has just gone through a divorce, was awarded custody, and has finally secured a job. Her car now needs a new engine to the tune of $7,500 and the dealership will not honor her extended warranty, claiming routine maintenance was not kept up. She owes $16,000 on the vehicle. If the car is voluntarily allowed to be reposed will her wages be garnished? Should she file for bankruptcy to protect herself? If so would that come first and then the repo?

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Law Offices of Michael J. Berger
Law Offices of Michael J. Berger | Michael J. Berger
Yes, if an individual files bankruptcy, this will prevent his or her wages from being garnisheed. If the wage garnishment has already started, the filing of a bankruptcy by the debtor will stop it. Before a creditor can garnishee a debtor's wages, the creditor must file a lawsuit and obtain a judgment. I need more information to help you and your daughter determine whether or not your daughter should file bankruptcy. This information includes detailed information regarding your daughter's assets, debts, income and expenses. Please call me.
Answer Applies to: California
Replied: 2/27/2011
Diana K. Zilko, Attorney at Law
Diana K. Zilko, Attorney at Law | Diana K. Zilko
Typically. you would not want to file bankruptcy over an amount of this size. The car loan lender would have to sue and obtain a judgment before they could garnish her wages. It might be best to look at other options.
Answer Applies to: California
Replied: 2/24/2011
Ferguson & Ferguson
Ferguson & Ferguson | Randy W. Ferguson
No.
Answer Applies to: Alabama
Replied: 2/23/2011
The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
creditor remedies are determined by state law, so the answer to your first question depends on which state your daughter lives. In California, wage garnishment is certainly a possibility if she owes any deficiency on the vehicle after it is repossessed. Depending on how much she's earning and what her living expenses are, she may be able to get the judge to reduce or even eliminate the garnishment. Bankruptcy is of course an option at any stage which should be explored.
Answer Applies to: California
Replied: 2/23/2011
Law Offices of Dennis Baranowski
Law Offices of Dennis Baranowski | Dennis Baranowski
If your daughter's car is repossessed, her wages could potentially be garnished. The lender would first be required to obtain a judgment against your daughter before it would be able to move forward with a wage garnishment, bank levy or other property levies. The question concerning whether or not she should file a bankruptcy depends on her overall circumstances, including her assets, debts, income and expense. As far as timing concerning the repossession and bankruptcy, it would depend on her other circumstances. Assuming she is eligible to file a Chapter 7 and there are no issues concerning her right to a discharge, the bankruptcy would take discharge her personal liability on the auto loan, whether the case is filed prior to or after the repossession. Your daughter should consult with an experienced bankruptcy attorney concerning her options.
Answer Applies to: California
Replied: 2/23/2011
    William C. Gosnell, Attorney at Law
    William C. Gosnell, Attorney at Law | William C. Gosnell
    Yes, it will prevent your wages from being garnished.
    Answer Applies to: Tennessee
    Replied: 2/23/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    Yes, bankruptcy stops garnishments. Your daughter may wait until she is sued and file before the judgment can be obtained or do it now. She needs to discuss that with a bankruptcy attorney to see when would be the best time to file and if she should file at all and what chapter would be best. To garnish wages the creditor must first have a judgment and to have a judgment she needs to be sued and either default (not answer the complaint) or lose the case at trial.
    Answer Applies to: California
    Replied: 2/23/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    The repo should come first, which will reduce the debt from secured to unsecured status. Then the bankruptcy will discharge the unsecured debt.
    Answer Applies to: California
    Replied: 2/23/2011
    Uriarte & Wood, Attorneys at Law
    Uriarte & Wood, Attorneys at Law | Robert G. Uriarte
    The Bankruptcy would prevent garnishment on account of a deficiency, should she voluntarily surrender the car. Have her call us for a free consult.
    Answer Applies to: California
    Replied: 2/23/2011
    Gus Johnson Attorney at Law
    Gus Johnson Attorney at Law | Gus Johnson
    Bankruptcy stops garnishments.
    Answer Applies to: South Dakota
    Replied: 2/23/2011
    Greifendorff Law Offices, PC
    Greifendorff Law Offices, PC | Christine Wilton
    Wages cannot be garnished unless there is a valid judgment in a court of law. If there is a deficiency owed on a vehicle, the creditor must file a lawsuit and obtain a judgment before they can garnish wages. If they are threatening garnishment right now, then they are violating the Fair Debt Collection Practices Act. Seek the advice of an attorney.
    Answer Applies to: California
    Replied: 2/23/2011
    Cohen & Kendziorra, P.A.
    Cohen & Kendziorra, P.A. | Robert S. Cohen
    Your wages are not garnished until and when there is a lawsuit filed based on a deficiency claim from the creditor. Only when there is a judgment ordered and signed by the Judge can a creditor try to collect on the judgment by garnishing your wages. This process can take upwards of months or even years depending on the creditor.
    Answer Applies to: Florida
    Replied: 2/23/2011
    Law Office of David P. Farrell
    Law Office of David P. Farrell | David Farrell
    Wage garnishment is a means of enforcing a judgment. If you daughter surrenders the vehicle and the lender realizes an amount less than what is owed, it may sue her for the difference. If the lender wins in court and obtains a judgment, at that point it may seek to enforce the judgment using a variety of different means, including wage garnishment. A bankruptcy discharge will absolve her of personal liability for the debt. Whether she surrenders the vehicle and then files bankruptcy, or surrenders the vehicle in connection with the bankruptcy proceeding makes little difference. She should probably contact the lender and see if she can reach some kind of agreement with them before filing bankruptcy.
    Answer Applies to: California
    Replied: 2/23/2011
    Diefer Law Group, P.C.
    Diefer Law Group, P.C. | Abel Fernandez
    Yes, if you file and give notice to creditors you can prevent garnishments.
    Answer Applies to: California
    Replied: 2/23/2011
    The Orantes Law Firm
    The Orantes Law Firm | Giovanni Orantes
    If you let the car be repossessed, the bank will sell the car at an auction and bill her for the difference between what was paid and the amount she owes. The amount paid at the auction is usually very low as people are always looking for bargains, but if a third party doesn't buy it, the lender holding the lien on the car will credit-bid (pay for the car using the debt your daughter owes to it). In other words, there is a deficiency almost invariably. Once the lender does that, it will start trying to collect from your daughter. If she doesn't pay, the lender may itself start a lawsuit to collect or may first sell the debt to somebody else who will start the collection process again and ultimately file a lawsuit against your daughter for the deficiency plus attorneys' fees and costs, etc. Once the lender wins, it can get a judgment against your daughter and have the Sheriff start garnishing her wages. A Bankruptcy filing does stop garnishment proceedings and the benefits are maximized if the petition is filed more than a week before her employer starts taking the money from her check and sending it to the sheriff. With that said, she needs to consult an attorney as soon as possible to determine whether a bankruptcy filing is even a good option for her despite the fact that it stops a garnishment. For example, sometimes people have several hundred thousand dollars of home equity, which may force them to pay their debts in full. Of course, since the possibilities are endless, it is best to consult a bankruptcy attorney well in advance to determine how to proceed. Some attorneys offer a free initial consultation.
    Answer Applies to: California
    Replied: 2/23/2011
    Judith A. Runyon, Esq. Attorney at Law
    Judith A. Runyon, Esq. Attorney at Law | Judith A. Runyon
    Yes, it will.
    Answer Applies to: California
    Replied: 2/23/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    Bankruptcy is the most effective way to prevent a wage garnishment, aside from paying on the debt.
    Answer Applies to: California
    Replied: 2/23/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Bankruptcy will keep her wages from being garnished. The lender has to sue her first and obtain a judgment before they can garnish any wages. So she has plenty of time to file for bankruptcy.
    Answer Applies to: California
    Replied: 2/23/2011
    The Carmichael Firm
    The Carmichael Firm | Booker Carmichael
    Your daughter can voluntarily surrender the vehicle in a chapter 7 bankruptcy (if she meets the means test) and discharge the debt.

    This would allow her to avoid a repo and wage garnishment
    Answer Applies to: Louisiana
    Replied: 2/23/2011
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