You filed your bankruptcy case to put an end to garnishments. You know that the automatic stay comes into effect upon the filing of your bankruptcy petition. The automatic stay is automatic, and does not require a further order of the bankruptcy court. You also know that the automatic stay stops wage garnishments.
Nevertheless, you get your first paycheck after you file for bankruptcy and the garnishment has not stopped! The same deduction, for the same amount? What happened? Why did it happen? And what can be done about it?
While it is true that the automatic stay is “automatic” and immediate, and does not require further order of the court, creditors will continue to garnish and conduct other recovery activities until they actually learn of the bankruptcy case. It may take as long as ten days before a creditor receives written notice of your case.
In addition, because most creditor collection activity is conducted by huge army of people, it may take another several days before the right person at the creditor gets actual notice of the filing. In other words, a process in motion stays in motion until something is done to stop it. Putting the brakes on requires knowledge of the case. Knowledge, unfortunately is not instantaneous.
That is why I always send notice of the filing directly to garnishing and foreclosing creditors by whatever means will get the notice in front of the right people at the creditor as quickly as possible.
But what if the creditor with notice of the filing continues to garnish in violation of the automatic stay? This is a more serious problem that requires immediate action by your attorney. In the case of creditor who willfully violates the automatic stay, you may be entitled to recover financial compensation occasioned by the violation,plus costs and attorneys’ fees. Contact your attorney immediately if you continue to be garnished after you file your bankruptcy case.
If you would like to learn more about garnishments (income executions) under New York law, or how to use bankruptcy to put a stop to garnishments, email me firstname.lastname@example.org for free copy of some white papers I’ve written on the topics.
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