If I filed Chapter 7 bankruptcy, don’t all garnishments cease?

We filed chapter 7 bankruptcy 2 months ago on the 9th. Our state tax refund was being garnished. Received a letter from the our state’s treasury department on the 10th.It stated that they were holding our refund for 28 days after which it would be released to the named creditor. Called the treasury department and was told funds were sent to the creditor ane we would have to get the money back from the creditor. The creditor is not entitled to the refund because they got the funds after we filed, correct? We had meeting the of creditors on last month on the 14th; discharged last week. Need to know my rights because the creditor won’t respond to us.

Asked on October 20, 2011 under Bankruptcy Law, Michigan

Answers:

Mark J. Markus / Mark J. Markus, Law Offices of

Answered 9 years ago | Contributor

There are a couple of different ways to deal with this.  One is to simply write a letter to the creditor demanding return of the funds, and see what happens.  The more legal approach is to file a Motion to Avoid the lien of the creditor pursuant to 11 USC 522(f) and then demand turnover of the funds.  In order to do this, however, you would need to have listed the funds that were taken as an asset on your bankruptcy petition and then exempted it under applicable law.

Exemptions are "protections" for value you have in certain assets such that they are "exempt" from collections.  Every state has different exemptions amounts available. Exemption laws are based on the state where you resided for the 2 years prior to filing your bankruptcy case or, if you lived in more than 1 state during that period, in the state where you resided for the greater part of the 180 days prior to that 2 year period.

Mark J. Markus, Attorney at Law

Handling exclusively bankruptcy law cases in California since 1991.

http://www.bklaw.com/

bankruptcy blog: http://bklaw.com/bankruptcy-blog/

Follow Me on Twitter:  @bklawr

Mark J. Markus / Mark J. Markus, Law Offices of

Answered 9 years ago | Contributor

There are a couple of different ways to deal with this.  One is to simply write a letter to the creditor demanding return of the funds, and see what happens.  The more legal approach is to file a Motion to Avoid the lien of the creditor pursuant to 11 USC 522(f) and then demand turnover of the funds.  In order to do this, however, you would need to have listed the funds that were taken as an asset on your bankruptcy petition and then exempted it under applicable law.

Exemptions are "protections" for value you have in certain assets such that they are "exempt" from collections.  Every state has different exemptions amounts available. Exemption laws are based on the state where you resided for the 2 years prior to filing your bankruptcy case or, if you lived in more than 1 state during that period, in the state where you resided for the greater part of the 180 days prior to that 2 year period.

Mark J. Markus, Attorney at Law

Handling exclusively bankruptcy law cases in California since 1991.

http://www.bklaw.com/

bankruptcy blog: http://bklaw.com/bankruptcy-blog/

Follow Me on Twitter:  @bklawr


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.