Wage Garnishment Case Study

I recently had the opportunity to sit down and meet with a 37-year-old mother of two, Karen. Karen had divorced in 2012 and had sole placement of her 7 and 10-year-old sons. She worked a full-time job as a medical assistant and an additional 12 hours per week as an in-home caregiver. Karen had carried about $4,500 of credit card debt that was used primarily for gas, groceries, and unexpected medical expenses. She also had a rather large, outstanding medical debt from a procedure she had years previous.

Karen had somehow managed to juggle these debts for years by making minimum payments on the credit cards and monthly payment arrangements on the medical debt. This budgetary balancing act, unfortunately, left Karen’s budget stretched to the verge of breaking, and it left her in a nearly constant state of anxiety. Her fears were realized when her 6-year-old car, for which she was still making monthly payments, needed major repairs. Without any savings to fall back on, Karen was unable to pay for both the car repairs and the monthly payment arrangement on the medical debt.

A New Beginning After Chapter 7 Bankruptcy

After several missed payments, the medical provider rescinded the payment agreement and referred the account to a local collections attorney who, unwilling to set up a new payment agreement, filed suit against Karen and began to garnish wages. She was now in an impossible situation, trying to provide for herself and her family while having her wages garnished.

Fortunately, a co-worker of Karen’s (and a former client of mine) referred her to our office. We filed a Chapter 7 bankruptcy for Karen. We were able to immediately stop the garnishment and even recover the garnishment payments that were already taken from her. Her credit card debt and medical debt was wiped clean and Karen, for the first time in years, was able to put something away in savings for life’s unexpected expenses. Now her anxiety is gone and Karen is now well on her way down the path of financial recovery!