In cooking, a garnish is something you use as decoration on a dish. It makes something pretty, whether or not it actually adds flavor. Unfortunately, in matters of debt and personal finance, the word is one you likely want to avoid.
People often file for bankruptcy when they are faced with an income execution, which is an action taken in connection with the enforcement of a judgment. You probably hear it called a garnishment or garnishee, but the technical term remains income execution.
There Must Be A Proven Debt
In order for a person or company to begin an income execution, you must owe money to that person or company. Though a creditor may send you bills, that’s not legal proof that you owe money. The only way to get that proof is to sue you, and for a court to issue a judgment against you. Without a judgment, a creditor doesn’t have legal proof that you absolutely, positively owe the debt.
There are, however, certain exceptions for federal student loans, child support obligations and tax debts. Though the processes differ from the ones used by credit card companies, the respective agencies still need to comply with those processes that are in place.
If for any reason a bill collector calls you and threatens an income execution without a judgment, you may have legal rights to sue under the Fair Debt Collection Practices Act.
Limits On Garnishment
Different states have different rules regarding income executions. In New York, the maximum garnishment is 10% of gross (before tax) income. If you’re subject to garnishment for alimony, support or maintenance, the combined garnishments cannot exceed 25% of your disposable earnings. As a counterpoint, California garnishment limits are covered by the federal rules found in 11 USC 1673.
The federal rules hold that the maximum part of the aggregate disposable earnings of an individual for any work week which is subjected to garnishment may not exceed (1) 25 per centum of his disposable earnings for that week, or (2) the amount by which his disposable earnings for that week exceed thirty times the Federal minimum hourly wage.
How Bankruptcy Stops A Garnishment (Sometimes)
When you file for bankruptcy, you get the full force of the automatic stay. That protection extends to an income execution, which means that filing the bankruptcy case – Chapter 7 or Chapter 13 – will serve to stop the garnishment instantly.
Bear in mind, however, that if your stay is limited due to repeat filing issues, the income execution may either not stop or may stop for only a short period of time. That’s why it’s important to talk with your bankruptcy lawyer before the case is filed to know the limits of the stay.
In addition, there are some types of legal action that aren’t covered by the automatic stay. In a Chapter 7 bankruptcy, the collection of your past due child support may not be stopped. If you’re in a Chapter 13 bankruptcy, however, that garnishment may stop because you’re going to be paying back the child support arrears through the plan.
In the end, it’s important for you to have all of the facts in front of you before trying to work through your garnishment issues with a bankruptcy filing. If you choose the wrong type of bankruptcy or have the wrong type of debt, you’re likely going to have some problems getting the help you’re seeking.
Image credit: Leo Reynolds
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