What is my next course of action regarding a garnishment disclosure based on a default judgment from a lawsuit I was never informed of?

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What is my next course of action regarding a garnishment disclosure based on a default judgment from a lawsuit I was never informed of?

I have just received a garnishment disclosure stating that a company is garnishing my state tax refund because of a default judgment against me. I have never heard of this company and had no knowledge of the suit against me until now and the amount of the judgment is over $5000. What is my legal recourse? I would like to nip this in the bud or come to some kind of agreement before they start garnishing pay or seizing funds from my bank account which I’ve read they have done to others.

Asked on February 11, 2012 under Bankruptcy Law, Michigan

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

It would be advisable to file a motion to set aside the default.  Your argument is that you were never served with the summons and complaint (the complaint is the lawsuit attached to the summons) and therefore without notice of the lawsuit you were unable to timely file an answer to the complaint with the court and serve it by mail on the opposing party.  If the court grants your motion, the case will then be back on track and litigation will continue and the wage garnishment should be halted by the court pending the outcome of the litigation.

In the unlikely event that your motion to set aside the default is denied and the wage garnishment remains in effect, you can file bankruptcy to stop the wage garnishment.  Your income and other factors will determine whether you are eligible to file Chapter 7 bankruptcy.  Chapter 7 bankruptcy is straight liquidation which eliminates your debts.  If you are not eligible to file Chapter 7, you can file Chapter 13.  Chapter 13 bankruptcy requires a plan (budget) for repayment of creditors.


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