Can a past employer use back wages owed to me to settle with a creditor regarding a failure to properly garnish my wages?

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Can a past employer use back wages owed to me to settle with a creditor regarding a failure to properly garnish my wages?

I worked for a small business and a creditor issued a wage garnishment. I filed a Chapter7 and all was discharged. Recently I left that employer and found out that the creditor was seeking payment from that employer because they had not properly garnished my wages before the bankruptcy was filed. The past employer paid that debt with back wages that they owed me. I feel that it was the employers due diligence to follow the garnishment and it is their own poor book-keeping and compliance that caused this. Can the past employer use my back wages to pay for this debt they now owe?

Asked on April 19, 2011 under Employment Labor Law, Indiana

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Employers can  generally garnish wages.  However, you have a three fold issue. If you owed the money and your employer was supposed to garnish your wages, then the issue is whether your bankruptcy discharged the debt and whether time had lapsed to collect on the debt.  Further, you also needed to  include those back wages owed as an asset in your bankruptcy and that coud cause you issues with the trustee if the trustee felt you were hiding assets. If I were you, I would consider this a wash.   


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