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Being Sued? Garnished? Why It's Not Too Late For Bankruptcy

8 March 2022

Tracy Roberts

Have you put off seeking bankruptcy protection, hoping to find another solution to your debt struggles? If so, you may end up in various stages of the collection process on one or more debts. If this happens, is it too late for a bankruptcy claim to help? Probably not. In fact, here is why it may not be too late, even when you're in these four stages of collections. 

1. Being Sued by a Creditor

Most civil creditors are required to spend a certain length of time and complete a number of steps to collect a debt on their own, but they are legally allowed to then take a borrower to court. If you've received notice that a case has been started, it's not too late to get bankruptcy protection. Your bankruptcy case comes with an automatic stay that halts further pursuit of the court case. 

2. Losing a Creditor Lawsuit

Did you go to court and fail to convince a judge? Perhaps you somehow missed the hearing entirely? If so, and you are notified that the creditor has won the judgment, it's still not too late to file bankruptcy. The judgment is a legal tool to facilitate the collection of the debt, but it must then be followed up by further actions to actually collect it. The period of time between these two events is your opportunity to get the automatic stay in place. 

3. Receiving a Garnishment

Garnishments are court orders to third parties to withhold a certain portion of your paycheck or an asset like a bank account, then send it to the creditor. Unfortunately, your employer or banking institution cannot defy a valid garnishment order. But you still have time to get protection if funds have not yet been taken. Garnishment is a stage of collections, although it's an advanced one. And therefore, bankruptcy notices will stop employers and others from following the order. 

4. Having an Asset Seized

Finally, what if your creditor has already taken an asset — such as a home, car, boat, bank account, or part of your paycheck? Believe it or not, it's still not too late for bankruptcy. While getting these assets back is more difficult (and usually requires that they haven't been sold), it's possible. There is a limited lookback period before the bankruptcy date when your trustee can recover assets that may be part of the bankruptcy case. 

Where to Start

Are you in any of these stages of collections? If so, you still have time to get the legal protection bankruptcy provides. But time is of the essence. Call a bankruptcy attorney near you today to learn more. 

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