Legal Process

• Garnishment orders are signed by a judge after a creditor or debt collector wins a debt lawsuit against you. The creditor or debt collector successfully argues in court that you failed to pay a debt. The judge then issues a legal decision called a judgment, which requires you to pay a specified amount of money. If you fail to comply, the creditor or debt collector can request garnishment.
  
  

Types of Garnishment

• There are two types of garnishment. Wage garnishment allows a percentage of your paycheck to be sent to a creditor or debt collector each time you are paid. Bank garnishment allows your checking or savings accounts to be frozen while the creditor or debt collector freely withdraws money to satisfy the judgment. Banks must comply with signed court orders for garnishment and they are not obligated to notify you that the action is taking place. A hold is placed on the account when the garnishment begins, and you are allowed only to deposit money. Other bank activities such as writing a check against your account or using your debit card are suspended. The restrictions can remain in place until the judgment is satisfied or the court order is lifted.
  
  

The Automatic Stay

• A legal injunction called "an automatic stay" stops garnishment. The automatic stay takes effect when you file for bankruptcy, and signed notices are sent to all of your creditors and debt collectors. Notices are also sent to your employer and bank if your bank accounts and wages are already being garnished. The automatic stay orders a immediate stop to all collection activities and it expressly forbids bank and wage garnishment. The automatic stay is one of the most powerful components of bankruptcy and is a top reason why many people file for bankruptcy.
  
  

Emergency Filing

• It's possible to file for bankruptcy in as little as one day, with some people filing emergency bankruptcy petitions after learning that their back accounts have been frozen because of garnishment. The federal bankruptcy courts allow for a streamlined application process for emergency situations such as garnishment. The remainder of the application process can be completed after the automatic stay is granted.
  
  

Bankruptcy Dismissal

• Not all bankruptcies are completed successfully. Procedural errors or a failure to comply with court orders can lead to a dismissal of the bankruptcy petition. If the bankruptcy is dismissed the automatic stay is lifted, and bank and wage garnishment can be resumed.