Seymour's Blog

“Stop Wage Executions by Filing for Bankruptcy”

I can’t tell you how many people I have had come in recently that have had wage executions on their salaries. Creditors’ attorneys are getting very aggressive these days.

In New Jersey, if a creditor has obtained a judgment against you, that creditor normally has the right to attach your wages and garnish a maximum of ten percent of your gross salary.

Before a creditor can get a wage execution against you, the creditor has to send you a Notice of an Application for a Wage Execution. This notice is sent to the Court and to the person who was sued.

One important thing to note is that if you are served with one of these notices, you have the right to object. You must file a written response with the Court, usually within ten days of the date you were served with the notice.

In most cases, if you object, the Court will schedule a hearing and you will make your arguments in front of a Judge. I have seen many Judges recently reduce the percentage of wage executions from ten percent to five percent, or even less, probably because of the difficult financial circumstances most people face.

Filing a Chapter 7 or Chapter 13 bankruptcy case immediately stops wage executions, unless the wage execution is for child support, or alimony, or some other debt that cannot be wiped out by bankruptcy.

Here is another little known fact. In certain cases, you can actually get back all the money that a creditor has taken from your paycheck within the last 90 days before you filed your bankruptcy. Here is how you can do that:

There is a special law that if a creditor has taken more than $600 from your paycheck within the 90 day period before you filed bankruptcy, you can get all of that money back after you file for bankruptcy. Therefore, when we have clients that have had a wage execution going on for a long period of time, we are very careful to check how much money has been taken out of their paychecks within the last 90 days. If it is more than $600, we almost always get that money back for them.

The law is a little strange, because if they have only taken $599 out of your paycheck within the last 90 days before you file for bankruptcy, you probably won’t get any of that money back. If they have take $601, you will probably get all of that money back.

The law doesn’t always make logical sense. The important thing to know is that if you have a wage execution against your salary, a good bankruptcy lawyer normally knows what to do to stop that wage execution and to get the money back that has been taken from your paycheck within the 90 day period before you filed your bankruptcy.

Feel free to call us if you have any questions.