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Bankruptcy Could Help You Recover Garnished Wages

a pair of glasses & wage garnishment form

If you’ve been struggling to pay your bills for a long time, you may have had your wages garnished by one of your creditors along the way. If you decide to file for bankruptcy under Chapter 7, there may be a way for you to get some of those wages back from the creditor that took them from your paycheck. Read on to learn about when creditors must return garnished wages in bankruptcy, and speak with a Maryland bankruptcy lawyer right away if you’re overwhelmed with debts.

Equality of creditors is a key concept in bankruptcy

Creditors may be forced to return garnished wages if the bankruptcy court concludes that allowing the creditor to keep them would be unfair. In a Chapter 7 bankruptcy, creditors typically receive only a portion of what they’re owed. The bankruptcy trustee divides up all the petitioner’s non-exempt assets among the creditors, allotting each a proportionate share of the total amount they’re owed and writing off (i.e., erasing) the remaining amount of the debt. If the petitioner made a large payment to one creditor the day before filing for bankruptcy, then that creditor would likely receive more of the money they’re owed than will the petitioner’s other creditors, and this is considered unfair under bankruptcy laws.

Garnished wages could be covered by an exemption or paid toward unforgiveable debts

For this reason, the bankruptcy court can require that wages garnished within 90 days of a petitioner filing for bankruptcy be returned to the bankruptcy trustee, where the creditor took over $600 in wages. If the debtor can show that those wages were covered by one of the debtor’s exemptions, they can keep the money. But, even if the money isn’t covered by an exemption, the money will probably go toward one of the debtor’s priority debts. Priority debts are ones that cannot be eliminated through bankruptcy. They’re the debts you’ll need to continue paying even after your bankruptcy case is closed, unlike your consumer debts (credit cards, medical bills, etc), so it can be helpful to have that money go towards your priority debts. A bankruptcy lawyer can help you figure out whether you’d be able to get back garnished wages if you filed for bankruptcy.

If you’re struggling to keep up with your bills in Maryland, contact a compassionate and dedicated Germantown bankruptcy attorney at Haeger Law at 888-463-3520 for a free consultation.