One of the fundamental purposes of bankruptcy law is to give the debtor a “breathing spell” after filing bankruptcy. Bankruptcy law provides for an automatic stay of most collection actions after the filing of bankruptcy. If the debtor’s wages are subject to a garnishment by a creditor before filing bankruptcy, the garnishment must stop upon the filing of the bankruptcy. If the creditor takes the debtor’s wages after the bankruptcy filing (before the creditor is notified of the bankruptcy filing), the creditor must return the wages to Debtor.
The caselaw states that the debtor has five days to object to the taking of the wages, so the garnishment lien of the creditor is not final. The creditor must return the wages.
The debtor can sue the creditor and his attorney for damages, including emotional distress damages.
The automatic stay will halt the contempt case if the creditor is notified of the bankruptcy filing (or usually the judge in the contempt case).
The case law provides that the debtor can sue the creditor and his attorney for damages, including emotional distress damages.
Current bankruptcy law gives very little relief to the debtor/tenant. Once the case is filed, if the landlord has a judgment for possession, the debtor must pay “any rent that would become due during the 30-day period after the filing of the bankruptcy petition”, and file a certification with the bankruptcy that the debt has made the payment and the state law permits the debtor to cure the deficiency. If the debtor complies, the landlord cannot enforce the judgment for possession (ie have the sheriff put you out of the property ) for 30 days after the bankruptcy filing.
If the debtor wants to stay in the property past the date that is 30 days after the bankruptcy filing, the debtor has to cure the entire default, and file a further certification that the debtor has done so. These rules apply only to eviction for nonpayment. If the eviction is for endangering the property or using/selling drugs on the property, or the endangerment/drug selling/use occurs within the 30 day period, and the landlord so certifies to the bankruptcy court, the landlord can proceed with the eviction. The law provides for a hearing in either situation if the non-certifying party objects.
If you file right now, the automatic stay in bankruptcy will stay the division of property in the divorce. If she seeks to lift the automatic stay to continue the litigation to determine her ownership rights in the pension plan, the bankruptcy court will likely allow her to proceed with litigating the pension issue.
