wage garnishment

[iamwho]

I was told that in Washington state you get garnished wages back when you file for bankruptcy?

[justbroke]

Did you read or get that information from an Attorney? Wage garnishment is a very tricky area. It depends on whether the money is still being held by the employer (or financial institution), or has been paid to the judgment creditor.

Once it is paid, it is difficult to recover the money. The Trustee, however, has the power to recover assets of the estate under the so-called preferential treatment clause. It allows the Trustee to make sure that all unsecured creditors were treated "equally" within 90-days preceding the case. If the funds were garnished outside the 90-days, then the Trustee's power is limited and it may not be recoverable.

The short answer is that it depends on whether it has been "paid" to the creditor (not just held by the intermediary bank or employer), whether you have any exemptions to cover this money, and whether or not it is a preference subject to the Trustee's recovery for the benefit of the bankruptcy estate (read... unsecured and priority creditors).

I would certainly not bank on being able to recover unless the bankruptcy is immediately filed after the seizure of the money (and not yet paid to the creditor). Actually, I would not bank on it anyhow. I would attempt to prevent the garnishment beforehand by filing bankruptcy before any judgment is granted and certainly before any judgment creditor levies your bank or garnishes your money.

[iamwho]

I was told that the employer has not sent any money to the creditor. They have been with holding wages for a long time. My step daughter said she will get this back in a couple weeks and pay us back if we lend her the money to go bankrupt.

[justbroke]

I hope that this works out for your step-daughter and yourself. The money could be sent to the creditor at any time. If I'm reading this correctly, it is a sizeable amount if it has been "held" for a long time. The real problem would be, is there enough in exemptions to cover the funds, and, maybe more importantly, whether the Trustee would seek to recover it for other creditors (if the amount is over $600, it has been within the last 90 days, and there are not enough exemptions to cover cash and/or wages).

As a parent or step-parent loaning money to a bankruptcy child, you should mind that things may not work out as expected and it may take more time for them to pay you back. I am saying that you should not base this particular decision on the possibility that you would get the money back that quickly (two weeks). Even in cases where the money is returned to the debtor, it could take several weeks and a Motion to Turnover in order to recover the money.

I wish you and your step-child the best.

[Freddy03]

I'm not in Washington but from my case - any money that was withheld after I filed was returned to me. Any wages that were garnished prior to filing were sent to the creditor. I was not able to get that back.

[Sonic]

That can't be true. Then what's the point of filing for BK?

[kornellred]

The point of filing for bankruptcy is to prevent judgment creditors from continuing to garnish wages or seize bank accounts, which they will definitely do if you do not file.

[unsupported]

I would contact an attorney, the WA law, as with most garnishment laws has some grey area. Specifically it calls out a Ch13, which if you daughter is filing, it sounds as though the wages would be a target for the trustee as JustBroke pointed out.

Washington State Garnishment Law
www ofm wa gov/policy/25.60.htm

Section
25.60.40.a

Just as an FYI, I've been garnished on/off most my adult life (child support/taxes), I would ask your daughter for some sort of proof that the employer is holding on to the garnished wages and what the balance/amount is. In CA for both taxes and child support, the garnished wages are sent to the creditor within 1-2 weeks after the pay period for which they were garnished from.

Best of luck to you and your family.