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3/5/2020

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

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​YES.  I have been getting a lot of questions about garnishments lately.  Both Chapter 7 and Chapter 13 bankruptcy filings in Alabama 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.


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3/5/2020

A debt collector called me and said “We will garnish your next paycheck.” Can they do this?

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 I am continuously amazed at the depths some debt collectors will go to in order to scare unwary debtors into making payments they cannot afford at the time.  The statement “We will garnish your next paycheck” is probably a lie. 

 In Alabama in order for a creditor to obtain a writ of garnishment against your employer to withhold money from your paycheck, that creditor must have a judgment against you.  In order to have a judgment against you, that creditor must have filed a lawsuit against you and won either after a trial or by default, that is, because you did not file a response.

Normally when this threat is being made, a lawsuit has yet to be filed.  How do you know if you have been sued?  First, if suit has been filed against you, you should have been served with a Summons and Complaint by either the sheriff’s department of your county or by certified mail.  However, if you cannot be found by the creditor, the creditor may have you served by publication, that is, by running a notice in the newspaper in the county of your last known address.  If you are still unsure, you may call the clerk of court of your county.

What if I have been sued?  See a lawyer immediately.  Depending on which court, Small Claims/District or Circuit, you have either 14 or 30 days respectively from the day you were served to file an answer.  Filing an answer generally denying the allegations in the lawsuit will prevent the creditor from obtaining a default judgment against you and will lead to your case being set for court after a few months.  This will give you time to save money and/or get your bankruptcy filed.

What if I already have a judgment and/or garnishment against me?  If you already have a judgment and/or garnishment against you, I would again suggest you see an attorney immediately.  You may be able to have the judgment set aside or appealed, but only if you act very quickly.  This may also be a good time to take a strong and hard look at bankruptcy.  With a bankruptcy you should be able to discharge the judgment prior to garnishment and stop any garnishment that is already in place.  Upon filing a bankruptcy, you may even be able to have a portion of any money garnished from your check returned to you.

The bottom line is do not let harassing calls from creditors or debt collectors scare you into giving them money you cannot afford to give them.  Many will say anything they think will frighten you.  If a debt collector says anything that worries you, make an appointment with an attorney and see what your rights are.  It’s probably a good time to take a look at your financial situation anyway.

Please email me with any questions regarding the topic of garnisments or any other bankruptcy or debt related topic.


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3/5/2020

What does a bankruptcy do?

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Here is a brief overview of a bankruptcy.

There may come a point in a person's life, whether its due to health problems, spending problems, employments problems, etc., where a person owes more money than even the tightest budget will allow him to pay.  When this happens and monthly payments begin to be missed, the people and businesses who are owed the money (the creditors) start calling and sending letters.  Eventually, if the creditors are not satisfied, there are foreclosures and repossessions of vehicles and/or lawsuits getting filed which will then lead to judgments, garnishments and liens.

A bankruptcy can stop most of these bad things from happening.  A bankruptcy can immediately stop the phone calls, letters, lawsuits, garnishments, foreclosures, and repossessions.  This is called the Automatic Stay and it "stays" all collection efforts.  A Chapter 7 bankruptcy will wipe out almost all unsecured debt, like credit cards and medical bills.  Most of the time under a Chapter 7 you will be able to keep your house and vehicles if you are current or almost current on those payments and continue to make your payments to those creditors as agreed to in your contract.

A Chapter 13 allows you to create a plan to pay some or all your debt back to the creditors.  A Chapter 13 can stop your house from being foreclosed on or your car from being repossessed by allowing you to pay back your arrearage over time.  It will also protect a house or vehicle in which you may have too much equity under the State of Alabama's exemption laws.  Alabama's exemptions are very low, so this comes in handy frequently.  The amount you pay back is based on your income and expenses and the amount of debt you need or want to pay back over the length of the plan.  Most plans last for five (5) years which is the maximum length of the plan.

So, the bottom line is a bankruptcy can stop collections of debt by creditors, wipe out all or part of your debt, and/or create a plan to pay back some or all of your debt while normally letting you keep the real and personal property you want to keep.

It is not all rosy though.  There are issues that can make filing bankruptcy very tough.  Bankruptcy also has long term effects on your credit.  I will deal with these issues in later posts.

If you are having financial difficulties, find out the truth about how bankruptcy may be able to help. Request my free book and/or call attorney Richard L. Collins or another experienced bankruptcy attorney.

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    I am an attorney located in Cullman, AL. I practice extensively in the area of consumer bankruptcy law, that is, I file Chapter 7 and Chapter 13 bankruptcies for individuals.  I handle cases all over North Alabama and have helped hundreds of clients through the bankruptcy process., I receive many referrals from former clients and their families and other attorneys. Why? Unlike other firms, I have a local office. If you are from out of town, we have the technology available to keep your traveling to a minimum. Also, unlike many firms, you will meet personally with an attorney, not a paralegal. An attorney will handle your case from start to finish. ,

    You will be taken care of throughout the process. We will obtain your credit reports to ensure all your creditors are listed. We will assist you in preparing the forms and then obtain your credit counseling certificate which is required prior to filing bankruptcy for you. We will explain the pros and cons of filing for bankruptcy and the different types of bankruptcy. We will not pressure you into entering into a bankruptcy process that you do not understand. We will be with you side by side through the bankruptcy process. , We represent individuals and work hard to lead them out of the debt traps, through the maze of bankruptcy laws, and to the relief of a bankruptcy discharge.

    ​I am a member of the National Association of Consumer Bankruptcy Attorneys, the American Bar Association, the American Association for Justice, the Alabama Bar Association, and the Alabama Association for Justice. I am a 1996 graduate of the University of Alabama School of Law. I also have a BA degree from the University of Alabama. The Law Office of Richard L. Collins is a federally designated Debt Relief Agency. Richard L. Collins helps clients file for bankruptcy protection under the laws of the United States. Alabama State Bar Disclaimer: No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.

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Collins Law Offices, PC  helps clients file for bankruptcy protection under the laws of the United States.
​Alabama State Bar Disclaimer: No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.
  • Cullman Bankruptcy Attorney
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