Sometimes when someone owes a debt he or she can’t pay, the person will consider avoiding the creditors completely. First creditors make phone calls, then threats of legal action.
Sometimes debtors have assets or income, even though they are unable to repay a debt.
Sometimes the debtor’s income is consumed by payments for necessities, for keeping family housed and fed, and there is nothing left over for creditors.
This doesn’t necessarily leave creditors out in the cold. Bankruptcy may be an option for you to keep your family from being left out in the cold. If a creditor learns that you have an income, the creditor can garnish your wages, leaving you with less money for life’s necessities.
Creditors sometimes learn this information from personally searching for it, and sometimes they learn it from the debtor, pursuant to a court order.
The Bankruptcy Light at the End of the Tunnel
Bankruptcy may be a way to obtain complete forgiveness for debts, so that creditors can no longer garnish wages, or to obtain court permission to repay debts over a longer period of time, and also avoid garnished wages.
Why Some People Can’t Afford NOT to File Bankruptcy
In order to understand the benefits of filing bankruptcy, it is helpful to understand the consequences of an alternative – wage garnishment.
Below is a the general process through which a creditor garnishes wages of a debtor. Not every step or requirement is listed below, but these are the main steps. This can show you how easy it is for a creditor to garnish wages, and therefore how beneficial bankruptcy may be for you.
Notice of Garnishment
A debtor will first be served with a Garnishment Exemption Notice and Notice of Intent to Garnish Earnings at least 10 days before attempting to garnish wages.
The creditor may serve this personally upon the debtor or by mail.
A sample of the requirements in Minnesota for this Notice may be found in Minnesota Statute 571.925 or online at http://www.revisor.mn.gov/statutes/?id=571.925#stat.571.925.
This notice is valid for one year. There may be things you can claim as exempt from garnishment. The creditor may dispute your claims.
In order to proceed with garnishment, the creditor will need to serve the debtor’s employer with a Garnishment Summons and Disclosure Form.
In Minnesota, an example of a Garnishment Summons may be found in Minnesota Statute 571.74 or online at http://www.revisor.mn.gov/statutes/?id=571.74.
The creditor must mail to the debtor a copy of the Garnishment Summons and Earnings Garnishment Disclosure Form that he or she served on the debtor’s employer, within 5 days of service on the employer.
Notice to Debtor
The creditor must also serve the debtor with a Notice to Debtor in no less than 14-point font.
An example Notice to Debtor may be found in Minnesota Statute 571.74 or online at http://www.revisor.mn.gov/statutes/?id=571.74.
Consider Your Options
Understanding what may happen when a debtor ignores debts may help you decide whether bankruptcy is right for you. If you think bankruptcy may a good option for you, the next step is to find out more about bankruptcy.