Pay for your bankruptcy with a garnishment coming out of your paycheck. Here are 5 ways. Think back. Your employer hands you a garnishment notice. D-Day is here. You’ve put off filing bankruptcy for months. It’s one of those things that is easy to do. Now you need to file. There is no tomorrow. From here on out you paychecks will be at least 25% less. Where do you get the money now? Here are the 5 ways to pay for bankruptcy with a garnishment:
- Tap your 401k
- The CYD plan
- The CYM plan
- Borrow from your boss
- File chapter 13
Borrow From Your 401k
I am not a big fan of taking money out of your 401k, except for a true emergency. This counts. In Ohio, short of paying the judgment, filing bankruptcy is the only way to stop wage garnishment. Unless you file bankruptcy a huge slice of your wage income is about to disappear, and it will only go to one creditor. They get your money while the rest of your financial life unravels. If there is anything left in the 401k this is the time to use it. Borrow just enough to pay for the bankruptcy, not a penny more. Do not have the funds direct deposited. Have a check issued and bring it directly to the lawyer. A large deposit into your bank account just before filing bankruptcy is a very bad idea.
The CYD, and the CYM Plan
When I was a criminal lawyer these were two of my favorite payment alternatives. CYD stands for, “call your dad.” I bet you can figure out what CYM stands for then. Unless you have tapped them out already, parents are normally ready, willing and able to lend a hand to a struggling child. This is what parents do. I can speak from personal experience. I am a parent. You have to guard against them lending too much of a hand. Just like the 401k. Accept only enough to get the bankruptcy filed. Better they pay the attorney directly. Too often I have seen generous family members give thousands of dollars more than needed to file bankruptcy. The extra is not bad. So long as they wait to give it to you until after filing.
Borrow from your Boss
This could be a valid option in a garnishment situation, especially if you are close to your employer. Garnishments are a pain. You suffer because your paycheck is going to the court. The employer suffers because he has to specially account for the garnishment each and every time you are paid. Then he has to mail the money to the court. If he does not, he can expect to be brought to court for contempt proceedings. To avoid this crap he may be willing to give you an advance to pay a bankruptcy lawyer. I have had clients where the employer actually cut the check and mailed it directly to me.
File Chapter 13
Chapter 13 is not as fee intensive as a chapter 7 case. Your Cleveland bankruptcy attorney has the option of taking all his chapter 13 attorney fees through the chapter 13 plan during the first year. To file you just need to pay the costs associated with filing the case. In my office these costs presently total $362 for an individual filing. That would be much easier to beg or borrow than the full fee and costs for a chapter 7 case. I consider this option only on a case by case basis. Other lawyers might not even consider it. On the plus side your plan payments will go to resolve ally of your debt, not just one judgment creditor, and the payments will be based on your ability to pay, and not a whopping 25% of income with no regard to your family’s need.
The fact is, there are real and workable options to come up with the money need to file bankruptcy to stop a garnishment even when your pay is being taken already. Call me. There are at least 5 ways to pay for bankruptcy with a garnishment in effect. Please comment below if you can share more alternatives.