If a creditor files a lawsuit against you and obtains a legal judgment for a debt, it may apply for a writ of garnishment in most states, which permits the creditor to contact your employer and order withholding of a portion of your wages to pay against the debt, interest on the judgment and costs associated with the judgment lawsuit. The writ may also allow the creditor to seize funds in your bank account. In most cases, you have little recourse against a garnishment order; however, in some cases, you can get your money back.
Statute of Limitations Expiration
Each state sets a statute of limitations for garnishment, which is the length of time that the judgment is valid and limits the time frame during which the judgment creditor may continue garnishment or other post-judgment collection efforts. For example, Georgia law limits the validity of a civil judgment to seven years. If the creditor continues garnishing your wages or bank account balances after the statute of limitations expires, and it has not renewed the judgment through the court, you may recover funds garnished after expiration of the statute of limitations.
Garnishment of Exempt Funds
Federal and state laws provide exemptions that prevent the creditor from taking all of your funds. Under federal law, 75 percent of your wages are exempt from garnishment unless the debt is for unpaid child support or taxes. Disability, unemployment and social security income are also typically exempt. States commonly place other exemptions on wages and bank account balances; for example, Ohio law protects $400 of the balance in your bank account from garnishment. If a creditor garnishes exempt funds, you may petition the court to get these funds back.
Bankruptcy
If you file bankruptcy, you can recover funds garnished within 90 days before a bankruptcy filing through an avoidance action. You or your attorney must file an adversary proceeding during the bankruptcy process, and your attorney must structure your exemptions to cover the garnished amounts. The attorney must also file a complaint to prevent preferential transfer. However, your ability to recover garnished funds through an avoidance action is not guaranteed.
Considerations
Avoiding a garnishment is a much less costly and time-consuming option than trying to get your money back after a judgment creditor takes funds from your wages or bank account. You probably can avoid judgment and a resulting garnishment order by contacting your creditor as soon as you determine you cannot afford your debt payments. Because filing a lawsuit and executing a garnishment order is costly for creditors, your creditor may offer a settlement, extended repayment plan or other solution to avoid these expenses.
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