After a judgment has been rendered against you the Creditor (the person who is owed money) has a powerful tool they can use to collect on that judgment: the income execution/wage garnishment (the terms mean the same thing). In New York State a creditor can garnish the lesser of 10% of your gross wages or 25% of your disposable income to the extent that this amount exceeds 30% of the minimum wage. Once an income execution is entered it can be difficult to stop, one option that the debtor (the person who owes the money) has to stop the wage garnishment against him/her is filing for bankruptcy.
Filing for Chapter 7 or Chapter 13 Bankruptcy gives you immediate relief from the income execution, as soon as the bankruptcy case is filed an automatic stay is in place against all creditors. The automatic stay requires creditors to immediately stop all collection activities, this includes wage garnishment. Creditors are aware of this provision under the bankruptcy code and if they violate it they can face serious fines from the bankruptcy court.
Here is an example of how the automatic stay works:
Jane has a large hospital bill that she is unable to pay, the hospital eventually files a lawsuit against Jane. The hospital is awarded a $10,000.00 judgment against Jane. After the judgment is awarded the hospital finds out where Jane is employed and files an income execution against her. Jane's wages begin to be garnished each pay period, the reduction in wages puts Jane in a hardship. Jane files for Chapter 7 bankruptcy, the automatic stay is immediately in place. Jane's attorney notifies the hospital and the sheriff, the income execution stops immediately and Jane's next paycheck is not garnished. The bankruptcy filing will stop the income execution AND eliminate the judgment debt. All of Jane's creditor's are prohibited from contacting her, Jane's stress is reduced and Jane gets a fresh start.
If you have a judgment entered against you and you qualify for bankruptcy you should file immediately in order to prevent lost wages. You can not get wages back that were garnished before you filed for bankruptcy. Contact our firm today for a free consultation.
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