Can Bankruptcy Stop a Wage Garnishment in Pennsylvania or New Jersey?
Bankruptcy is a very effective means of stopping and ultimately addressing the underlying debt leading to a wage garnishment. The automatic stay that exists when a bankruptcy is filed is equivalent to a very powerful court order that stops the majority of collection activities including wage garnishments, bank levies and sheriff’s sales – just to name a few. Due to the strict penalties that are involved with violating the stay, your creditors, including those who may have garnished your wages, are generally very compliant with taking actions to lift the garnishment, release the levy or stop the sheriff’s sale once a bankruptcy case has been filed. It is this powerful order that makes the initial filing of a bankruptcy such an effective means of dealing with garnishments in both New Jersey and Pennsylvania.
Connect with the bankruptcy attorneys at Young, Marr & Associates for a free consultation about your options for dealing with wage garnishment in New Jersey or Pennsylvania. Call today at (215) 701-6519 for our PA offices and (609) 755-3115 for our NJ offices.
What is a Wage Garnishment?
In New Jersey wage garnishments are a means of collecting on a wide range of debts and obligations, and therefore is a much more widely used remedy. For example New Jersey law allows for the collection of unsecured credit card debt by wage garnishment. Alternatively, and by contrast, in Pennsylvania, wage garnishment is an available remedy for creditors, but is much more limited to such things as collection of past due income taxes, child support or defaulted student loans. Notwithstanding, the automatic stay provided by the filing of a Chapter 13 bankruptcy or a Chapter 7 bankruptcy is an effective means of stopping a wage garnishment and either discharging or restructuring the underlying debt.
What is most important in any situation where you have a wage garnishment is that you avoid any excessive delay in filing your bankruptcy. In New Jersey, a Court Officer is appointed to handle the receipt and distribution of funds after a garnishment has been ordered. Often times if the money has already been disbursed by the Court Officer to the creditor it can be difficult or time-consuming to get the funds returned, even after a bankruptcy filing. Consequently, it is best to see a bankruptcy attorney before an Order of Court is entered or before a wage garnishment is directed to your payroll administrator to avoid this situation.
Bankruptcy and Wage Garnishment
Once a wage garnishment is stopped, you can then proceed to address the underlying debt through a Chapter 7 or 13 discharge, or if the underlying debt is non-dischargeable it may be paid through a Chapter 13 bankruptcy plan. In any event, wage garnishments can not only be a source of embarrassment in your workplace but can also prove to be a financial burden that causes a chain reaction of default on your other financial obligations. Accordingly, prompt consultation with a bankruptcy attorney and the appropriate use of the stay provided by filing bankruptcy and discharging the debt are an effective means of restoring financial order as well as financial peace of mind for you and your family.
It is also important to note that there are some instances, depending on where you live and where you work, when you may still be subject to a garnishment that would not normally apply to your state of residence. For example, if you work for a New Jersey Corporation but your physical residence and location for work is in Pennsylvania, a wage garnishment may still be issued against your New Jersey employer. Likewise, if you live and work in New Jersey and have an older debt from Pennsylvania that debt can be recorded in a New Jersey Court where you reside and a wage garnishment can issue against your New Jersey employer.
How to Slow Down or Prevent a Wage Garnishment in PA and NJ
As previously mentioned herein, time is of the essence when it comes to dealing with wage garnishments but timing in addressing the judgment which brought about the garnishment in the first place can be just as important. There are many means of slowing down the timeline in which a creditor is able to perfect a lien prior to obtaining a wage garnishment order. The availability to exercise certain rights to which you are legally entitled can be very useful in developing a strategy for restructuring your finances and gaining the most from the fresh start offered by bankruptcy. By way of example, in New Jersey, most debt collection lawsuits are initiated by a civil summons. The summons will provide a date certain that the individual being sued will have to respond to the creditor’s claim regarding the alleged debt. In most cases, the amount of the debt is disputable as it is impacted by per diem charges, counsel fees, costs and other factors that can change on a daily basis. Consequently, if you are being sued, it is completely reasonable to expect that you might contest the dollar amount claimed to be owed. In such cases, you are entitled to a hearing by simply paying a small fee and filing a one-page response to the creditors claim prior to the aforementioned response deadline. Accordingly, the filed response will prevent the entry of a default judgment and subsequent garnishment, thereby allowing you additional time to assess your financial position and to prepare your bankruptcy filing.
By contrast, in Pennsylvania, judgments can take longer to be perfected, even if the party being sued is in default. In Pennsylvania, most collection proceedings are started at a Magisterial District Court. The District Courts are informally known as small claims courts since the dollar amount of the claim being sought ultimately determines their jurisdiction over the case. Procedurally, civil judgments obtained in District Courts are appealable within thirty (30) days of their entry. Furthermore, even if you fail to defend and a judgment is entered against you, civil judgments obtained at this level are not perfected until they are recorded at the county level court by the filing of a judgment by transcript. Additionally, in Pennsylvania, an appeal of a default judgment involves the simple filing of a pro forma document with the county court. Accordingly, this is another means of staving off a judgment and ultimately avoiding a wage garnishment.
As we have already discussed herein, the process of obtaining a garnishment is almost always preceded by the creditor obtaining a default judgment. Once a default judgment has been obtained the creditor will generally go through a process of obtaining a court order for wage garnishment. The garnishment itself may be preceded by other actions as well. For example, in both Pennsylvania and New Jersey a Creditor who obtains a judgment has certain rights of discovery as to your personal whereabouts and the whereabouts of your assets. Often times, if you are subject to a judgment, a creditor may send you a list of questions regarding where you reside, where you work, what you own and other questions that may assist in them collecting on their judgment. This process is often referred to as discovery in aid of execution. In most cases, you are required to answer these requests under penalty of contempt. Consequently, if you have received a request for discovery it is important that you seek legal counsel to make sure you are doing all you can do to protect yourself and your legal rights.
A Pennsylvania and New Jersey Wage Garnishment Lawyer Can Help You
We always try to stress to clients that when it comes to bankruptcy timing is very important. And as we have already explored herein, this is especially true when dealing with judgments and wage garnishments. This is not to say that having a judgment or a wage attachment is irreversible but merely to stress that dealing with these matters early saves time and costs for you and your attorney. Remember even If a judgment is already entered or a garnishment is already being drawn from your paycheck, the filing of a bankruptcy will quickly stop these actions; however, as with many problems we encounter in life it is better to be in control of the problem than having the problem control you. Accordingly, having the right attorney, with the experience dealing with bankruptcy, judgments and wage garnishments is an important step in gaining and maintaining that control.
If you have judgments and/or garnishments you should prepare yourself with a list of questions for your attorney. Some suggestions are as follows: What are my states laws regarding garnishment of wages? Can I get back any funds that have already been taken from my pay? What are my options in bankruptcy? If I cannot discharge the debt can I pay it back under better terms through bankruptcy? Remember that being well prepared will allow your bankruptcy lawyer to better serve you and help you to follow through and make the right decisions in support of your case.
In the final analysis, wage garnishments can be a source of great consternation and financial burden. In both New Jersey and Pennsylvania, bankruptcy is a very effective remedy to relieve the strain, anxiety and financial certainty brought about by wage garnishments. If your wages are being garnished in Pennsylvania or New Jersey, consult with an experienced bankruptcy attorney at Young, Marr & Associates. Call today for a free consultation at (215) 701-6519 for our PA offices and (609) 755-3115 for our NJ offices.