Bankruptcy in “real people words”
By Paula Hundley and Lynn Smith
Much too often, clients who are filing bankruptcy tend to go into panic mode when the threat of their wages being garnished occurs. They tend to think there is some legal way to stop this wage garnishment other than filing their bankruptcy petition. There have been signs all pointing to this eventual happening, but many clients are so overwhelmed with various papers appearing in their mailbox that they don’t realize what’s about to happen to them.
Here is a typical scenario:
Debtor states, “I am being sued by one of my creditors and I received papers from their attorney that states it is a ‘Motion for a Default Judgment.’ I have read it but I’m not really sure what it means. I’m really worried about this. I have notified them that I will be filing bankruptcy. Can you give me a brief summary of what this is in “real people” words, please?”
Attorney responds, “It means that the creditor is trying to get a judgment against the debtor. When the debtor doesn’t show up for the court hearing, the creditor will get a ‘default judgment’. Then, in the near future, the debtor will get an order to appear for another court hearing. This hearing will be to discuss garnishment of the debtor’s wages. However, if the debtor files bankruptcy prior to the garnishment hearing, the courts won’t garnish the debtor’s wages. In fact, if the bankruptcy is filed before the ‘default judgment’ is entered into the court records, then the creditor won’t be able to obtain a judgment against the debtor.”
This is very common in the world of bankruptcy, although clients often forget to tell their attorneys they have an “Order to Appear,” which will eventually lead to a garnishment of wages. The moral of the story is there is no magic wand that an attorney can wave that will stop a wage garnishment. A bankruptcy petition HAS to be filed before a wage garnishment will cease. A debtor should heed the warning signs when a “Motion for a Default Judgment” is sent to them. It’s typically the beginning of a creditor’s legal journey to garnish a debtor’s wages.
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