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Chapter 7 bankruptcy discharge violated by wage garnishment

Florida residents may seek bankruptcy relief to regain control of their finances. Many see it as an opportunity to have a fresh start. In fact, in a typical a Chapter 7 bankruptcy, the borrower's debts are discharged after assets have been liquidated and funds are paid to the creditors. However, a couple in another state recently fought attempts to have wages garnished after their discharge.

A man and his wife had filed for Chapter 7 bankruptcy three years ago. The man had received some state unemployment benefits prior to his bankruptcy filing. It was reported that the state Department of Workforce Development had started questioning the unemployment benefits several years earlier. However, the agency had not made any claim.

The agency was listed as a creditor when the man filed for bankruptcy, so it received notice of the case. The agency was also made away of the deadline to file objections to the discharge of debt. After the man's bankruptcy case was closed and his debts were discharged, the agency leaned that it had overpaid the man's benefits. At this time, the agency started the process of garnishing his wages.

The man reopened his case and contended that the agency was in violation of his bankruptcy discharge. The bankruptcy court agreed with the man and ordered the state to return his garnished wages and to pay for attorney fees and costs.  The state had argued that the debts occurred after the bankruptcy case began, but the court determined that the agency had been given notice of the filing.

Filing for Chapter 7 bankruptcy is a big decision and should be addressed thoughtfully. It is advantageous to discuss the situation with an experienced Florida bankruptcy attorney. A lawyer will work with clients to develop a strategy specific to their needs with the focus on regaining financial stability.

Source: bna.com, "State Violated Bankruptcy Discharge by Garnishing Wages", Daniel Gill, April 28, 2017

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