The short answer is yes, you can probably get your money back.
If your paycheck was garnished, that is creditors took money from your paycheck to pay off your debts, you’ll want to know if there’s any chance that you can get that money back, as obviously you need it to pay other expenses.
You should speak to a Minnesota bankruptcy lawyer right away to see if you can get any of your money back.
WHAT IS GARNISHMENT?
In Minnesota, a creditor who has a judgment against you can ask your employer to turn over a portion of your wages each paycheck to the creditor.
The legal process by which a creditor forces your employer to hand over a portion of your paycheck is called garnishment.
- The creditor can take a maximum of 25% of your net wages, and you cannot receive less than 40 times the minimum wage
- At present, this means that they can’t garnish you if you receive less than $290 per week
HOW DOES BANKRUPTCY GET BACK THE GARNISHMENT?
Remember that bankruptcy is a very powerful legal procedure.
It gives people who file for bankruptcy abilities that they don’t have outside of bankruptcy.
One of these abilities allows them to undo certain payments made before filing bankruptcy.
The ability that we are concerned with here is called a preference. Bankruptcy Code Section 547, preferences (Source, Cornell Law).
The idea behind preference law is that it isn’t fair for some creditors to get more of the debtor’s money than others.
HOW DO YOU GET YOUR MONEY BACK?
A preference action allows the bankruptcy trustee, or sometimes the debtor, to get back recent payments on a pre-existing debt, that allow the creditor to get more money than the creditor would get without the payment.
The debtor can undo (get back) the payments only if they were:
- Taken involuntary
- Taken from money that would otherwise be exempt in the bankruptcy
In simple terms, that means that the debtor (or more likely his or her attorney) can get back wages if their paycheck was garnished or bank levies were made within 90 days before filing the bankruptcy, if:
- The creditor took at least $600, and
- The debtor exempted the money in his or her bankruptcy petition
This process can take a few months, so you shouldn’t count on having the money back right away.
Please also remember that as soon as a bankruptcy is filed, you are protected from any sort of act to collect a debt.
This means that any ongoing garnishment must stop immediately.
If your paycheck was garnished, then contact us at 612.824.4357 or visit one of our offices in Minneapolis, St Paul, Blaine, or Brooklyn Park now to let us know, so we can help you file a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in Minnesota.
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