Garnishment Refund After Bankruptcy
Garnishment Refund After Bankruptcy
You can sometimes get a garnishment refund after bankruptcy. Any creditor who has over-garnished your wages is required to give you a garnishment refund after or during the bankruptcy case. Some garnishment amounts are not required, however, to be refunded. It is important to know what types of garnishment money are refunded to you.
What Amounts You Get Back with a Garnishment Refund
Creditors are required to do a full garnishment refund for any amounts taken from your paycheck for pay periods that occurred after the bankruptcy case was filed. Garnishments do not always stop instantly due to paperwork not being updated. Sometimes this is not updated quickly enough by an employer. Other times it is not updated quickly enough due to inaction by a creditor. Any amount that was continued to be garnished after the bankruptcy started must be refunded by the creditor.
It is very important that your employer know early that you have filed for bankruptcy. You may want to notify your employer directly. Give them your filing date and case number. This increases the speed and likelihood that your garnishment will be stopped very quickly.
What Amount You Do Not Get Back in a Garnishment Refund
You will not receive a garnishment refund after bankruptcy for any amounts that were garnished during the time period before the bankruptcy case was filed. These non-refundable amounts also frequently includes time periods that happened either right at or directly after the bankruptcy was filed. This is due to payroll usually being conducted a few days before people are actually paid.
Many people get garnished for weeks or even several months before their bankruptcy case is filed. No garnishment refund will happen for these amounts after the bankruptcy is filed. You will not get back a garnishment refund for those time periods. You will only get it for any new amount taken (if any) after the bankruptcy case is filed.
Bank Account Freeze Garnishments
If your bank account is being garnished by an account freeze, the garnishment money will be fully refunded after bankruptcy. This is only true as long as the full 60 days has not yet occurred. If a hearing has already occurred or 60 days has passed after the freeze, it may be too late. You likely already lost the money from the bank account garnishment to the creditor even before the bankruptcy was filed.
Bank account garnishments are released and refunded after a bankruptcy case is filed. But, this may not mean that you will be able to keep the money. If the amount is too high, the bankruptcy trustee may take the money instead to pay back some of your creditors. This is especially true if the case is a Chapter 7 and the frozen amount is over $1,000.
