Debtors' Revenge: Debtor Can Seek Sanction Against Creditors That Fail to Dissolve Bank Garnishment Following Bankruptcy Filing

As soon as you file bankruptcy an "automatic stay" legally goes into effect which prohibits creditors from taking any action to collect a debt. If a creditor has served a writ of garnishment against your bank account the garnishment action and collection of money from your bank account is stayed by the bankruptcy. In the past, creditors would stop taking additional action to seize bank money pursuant to a garnishment upon the debtor filing bankruptcy but the creditor also would do nothing on its own initiative to cancel or dissolve the garnishment. If the account had money exempt in the bankruptcy the debtor would have to pursue legal action within his bankruptcy case to dissolve the creditor’s garnishment.

Bankruptcies filed after bank garnishment is common because the garnishment of the debtor’s accounts often precipitates bankruptcy. There have been some bankruptcy cases which have placed upon the creditor an obligation to take affirmative steps to release any garnishments on accounts, or levies on automobiles(not repossessions), upon the debtor’s filing a bankruptcy petition. The cases state that if the creditor fails to take such affirmative action against its own garnishment the bankruptcy court can and will impose sanctions against the creditor.

Bankruptcy debtors can hold accountable creditors that fail to immediately dissolve pending garnishments and levies after the debtor files bankruptcy. If you file bankruptcy when a bank has already garnished your bank account your lawyer can send an email and letter to the bank attorney who served the garnishment in which your lawyer can notify the attorney of the garnishment and demand that the attorney and his client dissolve the garnishment within a short time such as two or three days. If the bank’s attorney ignores the demand the your attorney can file a motion for monetary sanctions and attorneys fees to be levied upon the creditor.

Comments

[Cindy]

I forgot to list two bank accounts in which I am a co-signer, now one of the banks has frozen my account and the account in which I am a co-signer on..... the other accounts are for a elderly Mom and a handicapped brother in case I must step in for assistance in the future.. I did not know I had to list these accounts due to the fact I do not own this money..

[Chapter 13 Bankruptcy]

Hi,
I think debt settlement is the legal process. For people with unsecured debt like credit card debt before they file for bankruptcy, debt settlement is the first option to pursue.

[Anderson]

This is not effective enough especially with the advancement in technology in this day and age. The best way is to get proven guarantee protection from trusted organizations.

[Debt Settlement Attorney]

It's awesome! Now, it's the time of debtors to teach a lesson to those creditors who fails to dissolve bank garnishment, once you they have filed for bankruptcy.

[George Hall]

i have exactly this situation. Do you have a specific case you can give me to cite? Thank you.