Are your wages being garnished? Have you consulted an experienced Arizona bankruptcy lawyer about whether bankruptcy will stop your wage garnishment?

Sometimes your employer holds back some of your wages, and there are limits to how much of your wages can be garnished. Specifically, a garnishment action lets any party who obtained a judgment against you as a debtor to collect money from a third party such as your employer or a bank.1 In Arizona, creditors typically cannot garnish your wages unless they have a court judgment showing you owe them money.2 Certain wages can always be garnished, even without a court order, such as court-ordered child support or defaulted student loans.3

What wages are safe from garnishment?

In Arizona, certain wages cannot be garnished according to both Federal and law. A.R.S. § 12-1598(2)(c)(6). For example, the maximum amount that can be garnished  is the lesser of (1) 25% of your disposable earnings for the week or (2) the amount of disposable earnings (wages left after your employer makes the necessary lawful deductions) that week that exceeds 30 times the Federal minimum wage. 15 U.S.C. § 1673.

For garnishment of non-wages, Arizona law  exempts the following property, although further federal exceptions may apply:

  1. $300.00 in a bank, savings & loan association, or credit union account for an individual and $600.00 for married account holders
  2. Temporary Assistance for Needy Families funds
  3. Supplemental Security Income
  4. Social Security benefits
  5. Veteran’s administrative benefits
  6. Certain pension benefits and retirement funds
  7. Worker’s compensation
  8. Certain insurance proceeds4

Similarly, nonexempt earnings are those earnings that are subject to any judicial process including garnishment. A.R.S. § 12-1598(2)(c)(10). Since many of these exemptions do not apply in certain tax situations, it is best to consult an attorney.

How Do I Stop a Wage Garnishment?

You will need to file a written objection to a wage garnishment to request a hearing.5 A party to the hearing can object to the garnishment or the answer of the garnishee within 10 days of receipt of the answer or nonexempt earnings statement as long as the objector states grounds for the objection. A.R.S. § 12-1598.07(A), (C). The debtor will then receive a copy of the request for a hearing from the creditor.6

Can Filing for Bankruptcy Help?

Bankruptcy can help put a stop to a creditor who is garnishing your wages, subject to certain exceptions.7 More specifically, when you file for bankruptcy the automatic stay goes into effect immediately and stops creditor collection activities. In limited circumstances, a creditor may request that the stay be lifted to resume a wage garnishment.8 Further, there are exceptions to the automatic stay, such as domestic support obligations.9

Once you receive a bankruptcy discharge, provided that the wage garnishment was included in the discharge, then creditors should not be able to resume collection activities against your wages.10 In certain circumstances, you may be able to get back wages that were garnished before bankruptcy.11 Typically, if your garnished wages were over $600 total within 90 days prior to bankruptcy, you may be able to get the wages back if you have enough exemptions to cover them.12 So if your garnished wages, added in the aggregate, exceed all available exemptions in your bankruptcy then you would not have a right to retrieve the wages garnished 90 days before bankruptcy.13

You will need to file a complaint with the bankruptcy court using an experienced Arizona bankruptcy lawyer in order to receive the garnished wages.

[1] Bankruptcy Law Research Guide, law.arizona.edu, http://www.law.arizona.edu/library/research/guides/bankruptcy/garnishment.cfm (last updated Nov. 6, 2008).

2 Rebecca McDowell, Arizona Wage Garnishment Laws, nolo.com, http://www.nolo.com/legal-encyclopedia/arizona-wage-garnishment-laws.html (last visited Mar. 12, 2014).

3 Id.

4 This list was taken from A.R.S. § 12-1596(C).

5 Bankruptcy Law Research Guide, supra note 1.

6 Id.

7 Baran Bulkat, How Bankruptc Can Stop Wage Garnishments, Nolo.com, http://www.nolo.com/legal-encyclopedia/how-bankruptcy-can-stop-wage-garnishment.html (last visited Mar. 12, 2014).

8 Id.

9 Id.

10 Id.

11 Id.

12 Id.

13 John G. Brooks, Recovering Garnished Wages in Chapter 7 Bankruptcy, research.lawyers.com (Aug. 14, 2011), http://research.lawyers.com/blogs/archives/15191-recovering-garnished-wages-in-chapter-7-bankruptcy.html.