When people are faced with a garnishment of their wages or bank account it is normally a pretty shocking experience. Not only is it difficult to have money taken from you that you believed was yours, you also do not get advanced notice of the seizure.
Related - Stopping a Garnishment Part I
Fortunately, there are steps you can take to protect the money that has been seized when you are hit with a garnishment.
First, you need to read the garnishment summons that you received from the court. If you have not gotten a garnishment summons, you must contact the court where you reside to see when the court date is for your garnishment.
The main reason this is important is because this is likely the last chance you have to prevent your creditor from obtaining legal ownership of the funds that were seized from you. Once you are aware of this date, it is important that you begin to take steps to protect yourself so you are prepared when the court date comes.
The primary mechanism for recovering garnished funds is to exempt these funds from creditor process.
Under the Virginia Code, each person has the ability to exempt up to $5,000.00 in cash or other assets, provided they have not already used this exemption up in the past.
The way to claim the exemption is to file a Homestead Deed with Land Records and list the garnished funds as exempt. Upon filing, you should make sure to obtain a file-stamped copy of the Homestead Deed so that you can present it to the court on your hearing date and show that you have exempted the garnished funds.
In addition, you will also want to give Land Records your address and they will send the recorded Homestead Deed to you.
This will usually take a couple of weeks. Ideally, if you have filed well in advance of the court date, you will get the recorded Homestead Deed in time to bring it with you to court. If not, you should use the file-stamped copy you obtained when you filed.
Believe it or not, this is all you have to do to get the funds subject to the garnishment released back to you.
The rest is just a matter of giving notice to the bank to return the funds to your account or your employer to return the funds to you.
Now, while the process of obtaining release of garnished funds may seem easy, it will not solve all of your debt problems and can have some drawbacks.
The filing of a Homestead Deed, without filing an accompanying bankruptcy case, will only protect your assets temporarily. It does not do anything about the debt you owe.
As a result, the creditor can come right back around and file another garnishment against the same bank account or earnings. In addition, the creditor can pursue any other collection action available to it to pay the debt.
Finally, whatever portion of the Homestead Deed you have used to exempt the garnished funds can never be used again, even if you ultimately file bankruptcy at a later time.
For this reason, filing a Homestead Deed in conjunction with a bankruptcy is the more permanent and preferred solution.
This not only allows you to have the funds returned to you but also gets rid of the underlying judgment that gave your creditors the right to garnish your wages and bank account in the first place.
If you do not file bankruptcy, it is likely that your creditors will keeping coming until your Homestead Deed is all used up or they find others assets of yours to pay the debt.