My Wages Have Been Garnished or My Bank Account Has Been Levied. Can I Get the Money Back?

Actually under certain circumstances you can, but you will have to file bankruptcy to do it.  According to 11 U.S.C. Sec. 547(a), a bankruptcy trustee may recover any payment made by a debtor prior to a bankruptcy case’s filing, when it is shown that  the payments were made:

  1. To or for the benefit of a creditor;
  2. For or on account of an antecedent debt owed by the debtor before such transfer was made;
  3. Made while the debtor was insolvent;
  4. Made on or within 90 days before the date of the filing of the petition ; and
  5. That enables such creditor to receive more  than such creditor would receive if (a) the case were a case under Chapter 7 of the Bankruptcy Code; (b) the transfer had not been made; and (c) such creditor received payment of such debt to the extent provided by the provisions of the Bankruptcy Code

This is known as a “preferential transfer” which can be voided meaning the money can be brought back into the bankrupt estate.  BUT you don’t have to wait on a trustee to do this for you because 11 U.S.C. Sec 522(g) and (h) provide that a debtor, in place of a trustee, may avoid the preferential transfer as described above where:

  1. The debtor claims the transferred property as exempt on debtor’s Schedule C;
  2. The transfer was not a voluntary transfer;
  3. The debtor did not conceal such property;
  4. The trustee does not attempt to avoid such transfer.

This is a little technical, so don’t try this without the assistance of an experienced bankruptcy attorney and it may not work for garnishments and levies from the IRS.  Also, since this goes beyond the scope of a typical bankruptcy filing, be prepared to pay the attorney for this work, either as a percentage of the amount recovered or on an hourly rate.  But if you don’t do anything, the garnished wages or the levied bank account are gone forever.


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