A bank account garnishment can be a financial nightmare for an unsuspecting account holder. Along with potentially losing all the funds held in the account you may also incur non-sufficient funds fees for outstanding checks or automatic withdrawals which hit your account after all of the funds have been removed as a result of garnishment. One way to stop a bank account garnishment is to file for bankruptcy protection.
Imagine that you walk into your bank tomorrow fully expecting to be able to withdraw $1,500 from your account to pay your rent and the teller informs you that your account has been “frozen”. After some inquiries, you are told that a creditor has obtained a court order to garnish your bank account and that despite the fact that you have well over $3,000 in your account you cannot withdraw so much as a penny. To make matters worse, you know that you have written checks totaling a few hundred dollars that have yet to clear your account. You are further informed that those checks will be sent back for non-sufficient funds. One of those checks was to pay your electric bill. Just to top everything off, your paycheck is set to be direct deposited tomorrow. You guess it – that will also be unavailable to you.
This story may sound familiar to you if you have gone through bank garnishment before. If you haven’t, but you have creditors that have taken you to court and obtained a judgment against you, it could happen to you. Bank garnishment is a legal method for a creditor to collect debt after it has obtained judgment against you. Although you (the debtor) are required to be notified when a creditor has obtained a garnishment order, the notice is sent after the garnishment has occurred. After all, if you knew the garnishment was coming, you would move your money to another account. Another concern is that your bank account can be garnished more than once if the creditor does not take enough from your account the first time around to satisfy the judgment.
If your account has been garnished, or you fear it may be, bankruptcy will stop all garnishments. If you have contemplated filing for bankruptcy protection now is the time to consult with an experienced bankruptcy attorney and determine your options. As soon as your bankruptcy case is filed, an automatic stay (which is legal injunction) is automatically in place. No court order is necessary. The filing of the case operates automatically to stop all foreclosures, repossessions, garnishments and other creditor collection activities. The Bankruptcy Clerk’s office sends a notice to all of the creditors advising them of the filing. Your lawyer should send a specific notice by fax or email to the creditors who are garnishing or foreclosing so that they get the immediate notice that their collection actions have to immediately cease. This includes bank and wage garnishments. For a debtor who is already struggling financially, losing all the money they thought was safely held in a bank can be a devastating blow. However, once your bankruptcy case is filed, your bank account will be safe from creditors. Moreover, in most cases you will be able to discharge the judgment that led to the garnishment in the first place.
If you are concerned that your creditors may attempt to garnish your bank account, seek advice from an experienced bankruptcy attorney as soon as possible.