Alabama Bankruptcy Blog

Will a bankruptcy stop a garnishment that is already being deducted from my paycheck?

YES.  I have been getting a lot of questions about garnishments lately.  Both Chapter 7 and Chapter 13 bankruptcy filings will stop garnishments.  This is accomplished in a two step process.  First, we must file your bankruptcy with the bankruptcy court and thereby obtain a case number for your bankruptcy. 

 

Second, in the Court which issued the garnishment (normally your county’s Small Claims Court, District Court, or Circuit Court) we file a Motion to Quash Writ of Garnishment.  In this motion we ask the Court that issued the garnishment to enter an order stopping the garnishment and to return to you any money the Court is holding or receives in the future from the garnishment.  This means that if we can catch it in time, we may be able to get some of your money back.

 

Having said this, I would strongly recommend filing a bankruptcy prior to a garnishment going into effect.  I say this only because I know a garnishment taking 25% of your wages is not going to leave much to live on, much less enough to save to pay for a bankruptcy.

 

Please note that a bankruptcy will not stop a garnishment or income withholding order related to child support.

 

Richard L. Collins - Attorney at Law practicing extensively in Bankruptcy Law in Alabama - 422 Third Ave SE, Cullman Alabama

Do I qualify to file a Chapter 7 bankruptcy in Alabama under the “new” bankruptcy laws?

    Many people have been convinced that the bankruptcy reforms that went into effect in October of 2005 have made it impossible for most people to file Chapter 7 bankruptcies.  Nothing could be further from the truth.  Yes, there is now a “Means Test” which was intended to screen out people with “too much income.”  But, in my experience almost everyone whom I have counseled with regarding filing a Chapter 7 bankruptcy who could have filed for Chapter 7 bankruptcy before the 2005 reforms could still file a Chapter 7 bankruptcy after the reforms.  Nationwide studies have confirmed this -- Porter Study Finds Bankruptcy Law Reform Has Hurt the Poor Most and Bankruptcy Reform’s Impact: Where Are All the “Deadbeats”?

 

    How does the “Means Test” work?  First you see if you are over or under the median income for a family of your size in Alabama.  For a quick check click here.  If your household income is under the median income for the same size household in Alabama, then you have passed the “Means Test” and qualify to file a Chapter 7.

    If you are over the median income, it DOES NOT mean you are disqualified from filing a Chapter 7 bankruptcy.  Most people can still file.  There is just more paperwork to do.  With the additional paperwork you are allowed to deduct taxes, housing costs, transportation costs, secured debt payments, medical costs, and many other costs.  After deducting these costs, most people have very little income that could be used to pay unsecured creditors; and therefore, can file a Chapter 7 bankruptcy.

 

    The bottom line is, if you are having financial problems, do not let the “Means Test” scare you away from seeking good legal advice from a qualified bankruptcy attorney.  Despite anything you may have heard, there is a very high chance you can still file a Chapter 7 bankruptcy.  And, if you are one of the few who cannot file a Chapter 7, you can probably file a Chapter 13 bankruptcy and still be protected from creditors.

 

Richard L. Collins - Attorney at Law practicing extensively in Bankruptcy Law in Alabama - 422 Third Ave SE, Cullman Alabama