What to Do to Avoid Bank Garnishment?

You've just discovered that one of your creditors is beginning to take out cash from your paycheck or even directly from the account you hold! This is called a garnish. Creditors in some states can collect money after they have received a judgement against you. It is a legal collection action. IRS and Student loan creditors also use a garnish to retrieve what you owe even if they do not lodge a lawsuit against you. Here's everything you need to know about garnishing and learn how to combat the same. Consult a bankruptcy lawyer in OKC to know everything about garnishment.

Lawsuit and Judgment

Most bank account garnishments begin with a lawsuit against you. In that case you are liable for paying a debt and granted the right to your creditor who may have sued you, to collect that cash. Judgment creditors most frequently collect what is owed by garnishing salaries, putting liens on real property like your home, and collecting bank accounts.

Writ of Garnishment

The creditor provides your bank with a legal document known as Writ of Garnishment to collect the account. Upon obtaining this writing, the bank will freeze any cash in your accounts in preparing for turning it over to the creditor.  The bank is likely to freeze cash in any account in which you have an interest in property even though the cash is not really yours, including your children's accounts. For this reason, custodial accounts are usually a better choice for your children's bank account than joint property.

Steps You can Take to Combat Garnishment

Talk to Your Creditor

If you understand that you are not going to pay your account according to its terms, contact your creditor and decide to go for any alternative payment method. Some creditors refuse to speak to you before 60 days of the payment due period. However, other creditors will try to understand what's going on before you become delinquent.

Some of the alternatives you can negotiate with your creditor include: 

  • Interest payment may get exempted after a period 

  • After a period, ‘no payment’ should be allowed   

  • Allowing partial payment  

  • A decrease in the rate of interest 

  • Settling the account for something less than what is due (You can always make an offer)

A proper negotiation with the creditors may help you to come to a decision without letting your account to be garnished.

 Exemption Claim

Once the tax is in place, your bank will usually notify you and the creditor will have to serve you with the order.  You have 10 days from the moment you are served with the writ to file with the tribunal. You should have a bankruptcy lawyer in OKC to assist you with this. You are basically telling the tribunal that the funds that were in your bank account now of the tax were exempt or shielded from your creditors. The tribunal will set a deadline for the hearing to determine which part of the money is excluded.

File a Bankruptcy Case

Filing a bankruptcy case will also prevent a garnish. In most cases of bankruptcy, an injunction called an automatic stay takes effect when a bankruptcy is filed. This injunction prevents most activity in the collection, including calls and letters. Most lawsuits and garnishments are also stopped. The creditor may be able to ask the bankruptcy court to lift the automatic stay to allow the garnishment to continue, but the court will only allow that under certain special circumstances.

Another issue is whether your debt can eventually be discharged in a bankruptcy case. This relies mainly on the type of debt and somewhat on the sort of bankruptcy you file.

If you perplexed about the whole process, hire a bankruptcy lawyer in OKC from Chris Mudd and Associates and solve all your garnishment related problems.

** Disclaimer: This blog post does not constitute legal advice, nor does it create a client-attorney relationship.