If you owe a debt that is only in your name, you might believe that it is solely your responsibility and not your spouse’s. If your creditor decides to sue you, your wages could be subject to a wage garnishment. However, California is a community property state. Therefore, if a creditor has a judgment against you, they can garnish your wages and your spouse’s wages. Often, the best way to stop a wage garnishment is by filing for bankruptcy. Our Roseville bankruptcy attorney from The Bankruptcy Group looks at wage garnishments and bankruptcy below.
Community Property and Wage Garnishments in California
California law permits creditors to obtain a judgment against a debtor, levying their property. A judgment lien always extends to community property in California, including your spouse’s bank account or wages.
Community property includes property acquired by a married couple during their marriage. It does not matter whether the property is in the name of only one spouse. A judgment creditor will only be prohibited from accessing funds that your spouse earned before your marriage as long as those funds are held in a separate account in your spouse’s name and not comingled with any community funds. In nearly every situation, a spouse’s wages will not fall into this category.
Wage Garnishments in California
To obtain a wage garnishment in California, most creditors must file a collection lawsuit and receive a judgment in their favor. The judgment will affirm that the debtor owes the creditor and include the amount due. Once a creditor has a judgment, they can petition the court for a writ of execution. The writ of execution will be delivered to your employer by a county sheriff. Once your employer is notified of the judgment, they will pay a portion of your wages directly to the judgment creditor. There are exceptions to this process. If you owe unpaid income taxes or court-ordered child support, the government has the right to obtain a wage garnishment without going through the same process as an ordinary creditor. This is also the case with most student loans.
Because salaries are considered community property in California, a creditor who has a judgment against you is entitled to garnish your spouse’s wages. If you are unemployed, or if your spouse earns more than you, your creditor might be more aggressive in pursuing a garnishment against your spouse.
California Bankruptcy and Wage Garnishments
When your salary is subject to a wage garnishment, the income you have to pay your ordinary expenses could be severely limited. A wage garnishment often results in falling behind in other bills. Unfortunately, you do not have many options once a garnishment is in place. Your salary will be reduced until the judgment is satisfied or you enter a settlement agreement with your creditor. However, if they are being paid regularly, your creditor has little incentive to offer you a settlement.
One alternative solution people often think of as a last resort is filing for bankruptcy. The truth is, in many situations, filing for bankruptcy is the best option. It is also the fastest way to stop a garnishment.
When you file for bankruptcy, you are afforded numerous protections under federal law. Bankruptcy was not designed to punish a debtor – its purpose is to provide a debtor with a fresh financial start. The most powerful and useful protection provided through bankruptcy is an automatic stay. An automatic stay is an injunction that goes into effect immediately when you file for bankruptcy. It serves as a legal barrier between you and your creditors. All your creditors are prohibited from acting to collect any debts you owe, including phone calls, letters, and lawsuits. When you file for bankruptcy, all garnishments against your salary and your spouse’s salary must cease. Our Huntington Beach bankruptcy attorney will contact the sheriff and your employers, notifying them that you are not under the protection of bankruptcy.
Chapter 7 and Chapter 13 Bankruptcy and Wage Garnishments in California
Filing for bankruptcy is only the first step. What will happen with any wage garnishment will depend on the type of bankruptcy you filed. Chapter 7 is known as a “liquidation” or “straight” bankruptcy. Designed for people with limited assets, lower income, and significant debt, Chapter 7 allows a debtor to eliminate most of their debt within five to six months. If you qualify for Chapter 7 and your debt is discharged, the wage garnishment will be terminated entirely. However, certain debt is not dischargeable. If you or your spouse’s wage garnishment is for non-dischargeable debt, the wage garnishment will go back into effect once your case is dismissed or if the creditor petitioned the court for relief from stay.
If you are not eligible to file Chapter 7, or if your debt is not dischargeable, Chapter 13 might be the better option. When you file for Chapter 13, you are immediately afforded protection by an automatic stay and any existing wage garnishment must stop. However, in Chapter 13, you will be required to file a bankruptcy plan that will propose a monthly payment to your creditors for the next three to five years. Our California bankruptcy attorney will thoroughly review your debt, income, and assets to create a plan that addresses your creditors and complies with the law. If your debt was not dischargeable, Chapter 13 allows you to pay the debt while potentially discharging other liabilities you might have. Many people find that it is more manageable to pay their creditors through Chapter 13, especially when a significant portion of their outstanding debt could be eliminated. Furthermore, the monthly bankruptcy payment is often less than the wage garnishment.
Call Our California Bankruptcy Attorney if Your or Your Spouse’s Wages Are Being Garnished
Managing debt and your household expenses is often challenging. When your wages are being garnished, it becomes more difficult, if not impossible. Our experienced California bankruptcy lawyer can help you in addressing your debt and wage garnishment. The compassionate Huntington Beach chapter 7 bankruptcy attorneys and staff at The Bankruptcy Group understand the emotional strain associated with financial struggle. Our office is committed to assisting people in getting back on their feet. Call 800-920-5351 to schedule a free consultation and start down the road to economic recovery.