What are my options if I defaulted on a credit card and a judgment was passed against me?

My paychecks are garnished 25%. About 2 months ago, without my knowledge, they wiped my checking and savings clean, leaving me minus $900 in the account after fees and other automatic payments. Then about 2 weeks ago, it happened again, this time leaving me -$500 in the accounts. They have now taken 34% of my pre-tax wadges this year. Is this legal? Is my only option Chapter 13?

Asked on September 8, 2014 under Bankruptcy Law, Colorado

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

While there are limits on how much can be garnished, or diverted from, your paycheck to creditors, there is no limit to how much or how often money can be taken from your bank accounts. (Once the money is in your account, taking it is not considered wage garnishment any more.) Therefore, from what you right, this would be legal and your creditors may be able to this again before the year is up. If you still owe a cosiderable amount then, yes, you may need to consider bankrupty as an option, though you should also consider Chapter 7 (liquidation) as well as Chapter 13 (payment plan), since it's possible Chapter 7 might be better for you (depending, for example, on how much you own).


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