One of the most aggressive actions that a creditor can take when trying to collect on a debt that you owe is by way of a wage garnishment or bank levy (sometimes referred to as a “bank account freeze”). But fortunately, the filing of a St Louis bankruptcy will totally and completely put an immediate end to all of that (as soon as the case is filed). Why? Because once a bankruptcy is filed, our team will contact the attorney representing the creditor who is garnishing your wages, provide them with your bankruptcy case number, and demand that the garnishment be released. Furthermore, the underlying debt that you owe the creditor (the very same debt that precipitated the garnishment in the first place) will be discharged (especially if we file a St Louis Chapter 7).
Only $300 Upfront Fees for a St. Louis Chapter 13 BankruptcyBut let’s back up a few steps! Because we should probably start a little bit earlier in the process, and discuss how exactly a wage garnishment even comes into play. So let’s say you owe a balance of $5,000 on a basic credit cards. You are unable to pay the monthly minimum anymore, so you start to fall further and further behind. In response, the credit will begin calling you (pretty much non-stop). The conversation is almost always the same – they tell you how much you owe, how far behind you are in arrears, and that late fees are being applied (information you already knew all too well) – then you tell them (for the hundredth time) that you simply cannot make the payment anymore, and that if by chance you run into a large sum of money anytime in the near future, that this creditor will be first on your list.
Let Us Help You Get Rid of Your DebtsEventually, the creditor will sell the debt to a third-party collector (for pennies on the dollar). This collection agency will then blow up your phone for a few months (and then sometimes pass it off to yet another collector who will try the same approach). But eventually, one of these entities (either the original creditor or a subsequent collection agency) will sue you for breach of contract. In the legal world, this simply means that the creditor is claiming that you signed an agreement in which the creditor would extent you a line of credit, and that you would pay out a certain amount of money every month to make good on it; that you failed to keep your end of the bargain, thereby breaching the contract; that the creditor should be allowed other means by which to collect the debt; and that a judgement from the court should be issued to that effect.
If you are the Defendant in such an action (i.e. the party who has allegedly breached the contract), there are not very many defenses that you can make use of. And unless you can prove that someone fraudulently took out the credit card by using your name and info (without you being aware of such a thing), then the court is going to ultimately side with the creditor. Once the creditor receives the judgment, it usually has to wait at least thirty (30) days before the judgment becomes “final”. (This just simply means that the period of time during which you could file an appeal must pass). But thereafter, the creditor will waste little time in filing the lawsuit against you.
Procedurally, the court will require that the creditor serve you with a summons. This must happen within a relatively short period of time after the file their case. A “summons” is basically a document which puts you on notice of the fact that a lawsuit has been filed, you are named in the suit as one of the parties, and that a hearing will convene at such-and-such date and time, at such-and-such court. The most common way in which a creditor will serve you is by way of a Process Server who will come to your home or place of work (and deliver it to you). Just so you know, the rules regarding “personal service” are fairly loose. For instance, here is are a couple of examples that the court considers you to have been personally served: 1) The process server comes to your house, but you are at work. Your Uncle Joe (who is staying with you for the week) answers the door, and accepts the summons on your behalf. According to the court, this is the same thing as you having been “personally served” (even if Uncle Joe forgets to tell you about it); 2) The process server comes to your house, but you are at work. No one answers the door, but the eighteen-year-old neighbor kid is standing in his driveway smoking a cigarette. The process server asks the kid if he will accept service on your behalf, and he agrees. According to the court, you have been “personally served”.
Once service of the summons is rendered, the next step in the process is the initial hearing on the matter in front of the judge. If you do not appear at this hearing, the court will give a “Default Judgment” to the creditor. This basically means that you didn’t show up to defend yourself, and everything that the creditor asked for in its pleadings is granted (including their outrageous interest rate). As mentioned above, the creditor has to wait 30 days before the judgment becomes final. Then it can move forward with one of three forms of collection (in order of likelihood): 1) Wage Garnishment; 2) Bank Levy; or 3) Lien Against Property. The reason why #3 is the least likely thing the creditor would do is because this method often does not bear much fruit. For instance, if you own a house, the creditor could put what is called a Judgment Lien against your house. This lien would have to be paid off if you were to ever sell it (so it that sense, it would almost become similar to a mini-mortgage). But you could end up living in that house for the rest of your life (so the creditor rarely executes a judgment lien against property).
If the creditor knows where you work, then it will go about drawing up the Writ of Execution to Garnish Wages. If the creditor does not know where you work, then it will likely try and figure that out as quickly as they can (like going to your social media pages, on which most Americans tell the world all of the intimate details of their lives for anyone to see). But let’s assume the creditor does know where you work. The creditor will then send the Writ to your employer, and your payroll department will thereafter execute the garnishment order. Legally, the creditor can demand that a full 25% of your net earnings be garnished from each paycheck. However, if you can rightfully claim Head-of-Household status (like when you are the primary caretaker for minor children), then the garnishment will drop down to 10% of your net earnings.
If the creditor knows where you own financial accounts (like a standard checking and/or savings), it will do a similar process called a Notice of Levy. This order is sent to your bank or credit union. Once the financial entity receives the order, it will immediately freeze your account. This simply means that you will no longer be able to make any withdrawals from it. The bank / credit union will likely send you a letter notifying you of this action. This letter is referred to as the “Return Date” letter. If no action is taken on your part before the Return Date is reached, then the bank / credit union will be obligated to transfer all of the money that happened to be in your account to the creditor.
But here’s the good news: once a St Louis bankruptcy is filed, any and all collection activity must come to an end. This would include things like wage garnishment and bank levies. So for instance, if you had been dealing with a garnishment, our firm would provide your bankruptcy case number to the attorney that is representing the creditor; the attorney for the creditor would then send a “Release of Garnishment” to your payroll department. Or in the case of a bank levy, so long as we do in fact file your bankruptcy before the Return Date, then the bank / credit union will not remove the funds from your account (in other words, it will “return” the money back its rightful place).
All you need to do is give us a call!! We will answer all of your questions, and get you back on your financial feet! But the sooner your contact us the better. Because if we file the case before the garnishment takes effect, all the better. We look forward to hearing from you!
At The Bankruptcy Company, we want to make sure that you receive the very best bankruptcy services in all of the St Louis Missouri area. Our team will get you back on your feet, help to dramatically improve your financial standing, and put you in the best position possible for the future. The attorney fees for a standard St Louis MO Chapter 7 are $675, and the upfront fees for a St Louis MO Chapter 13 are $300. But the initial consultation is free of charge!!