Can I get my money back if my bank account was levied or pay check garnished?
- What is the Automatic Stay?
Under Federal law, your creditors (bill collectors) must stop taking your money after you file bankruptcy. This “stay” is automatic and begins the moment you file bankruptcy. You may get back any money your creditors take from you after filing bankruptcy. If your creditors intentionally took money after they learned you filed bankruptcy, then a judge may punish those creditors by awarding you more money.
The automatic stay is intended to give immediate relief to a person filing bankruptcy. All bill collectors’ efforts must stop. Courts strictly enforce the automatic stay because it is an important benefit for people filing bankruptcy. A creditor may not take money from a person who filed bankruptcy even if the creditor did not know that the person filed bankruptcy.
- Wages Garnished After Filing Bankruptcy May be Returned to You
- What is Wage Garnishment?
If you owe someone money (a “creditor”), the creditor may file a lawsuit to get that money. A court may allow the creditor to take your wages directly from your employer. This is called “garnishment.” If a creditor garnishes your wages after you file bankruptcy, you may be able to get those wages back. There are court cases about this issue.
- In Re: Nicole Brantley, Petitioner,Docket No. 13-0130, 2013 WL 3007104, (U.S.D.A. Mar. 15, 2013)
In this case, a court considered whether a debit owed to the Federal government was valid. Ms. Nicole Brantley owed the money, but she filed for bankruptcy. The automatic stay protected Ms. Brantley and automatically ended wage garnishment. The Judge canceled the hearing. The judge dismissed the lawsuit.
- In Re: Joyce Woodruff, Petitioner, Docket No. 12-0571, 2013 WL 3007109, (U.S.D.A. Apr. 9, 2013)
In this case, Ms. Joyce Woodruff allegedly owed money to the Federal government. Ms. Woodruff petitioned a court to determine whether she truly owed the money. She filed for Chapter 7 bankruptcy. Therefore, the automatic stay ended wage garnishment. The court dismissed and ended the case.
- S. Postal Serv. v. Hudson, 230 B.R. 542 (W.D. Tenn. 1999)
Mr. Hudson worked for the post office, and he filed bankruptcy. The post office took $50 from Mr. Hudson’s pay check to pay fees involved with the bankruptcy. Mr. Hudson sued the post office for the $50. The bankruptcy court agreed, the post office could not have the $50 fee because the automatic stay protected Mr. Hudson.
The post office appealed the bankruptcy court conclusion. But, the court of appeals agreed with the bankruptcy court. The post office violated the automatic stay when it took the $50 fee from Mr. Hudson. The automatic stay applies to everyone and every act which tries to take money. Any type of wage garnishment violates the automatic stay.
- Levied Money May Be Returned to You
- What is a Levy?
If you owe someone money (a “creditor”), the creditor may file a lawsuit to get that money. A court may allow the creditor to take money directly from your bank account. This is called a “levy.” If a creditor levies your bank account after you file bankruptcy, you may be able to get that money back. There is a recent court cases about this issue.
- Solfanelli v. Corestates Bank, N.A., 203 F.3d 197, 206 B.R. 699, 230 B.R. 54 (3d Cir. 2000)
Mr. Solfanelli filed for bankruptcy. Then, a creditor took money from Solfanelli’s bank account (a “levy”). The levy was a violation of the automatic stay, and the creditor was not supposed to do that. The court considered whether the creditor violated the automatic stay on purpose. The court concluded yes, the violation was willful. The court ruled that the creditor should be punished. The Court ordered the creditor pay Mr. Solfanelli additional money because the creditor because the creditor willfully violated the automatic stay.