Our office gets frequent phone calls from people who have been notified of a bank levy or wage garnishment and want to know how to respond. A garnishment or levy rarely comes out of nowhere, and is almost always the result of having a judgment entered against you in a lawsuit. So the best response depends on a couple of different factors, such as whether there are grounds to vacate the judgment in the underlying lawsuit, whether you can exempt the property from being taken, and/or whether bankruptcy is appropriate.
Finding the underlying lawsuit
Our office often hears from consumers who are being garnished or levied, and who had no idea that they had ever been sued in the first place. In such situations, it is best to start tracking down the underlying lawsuit. If you received a copy of the notice of levy/garnishment, then it is fairly easy to track down the underlying lawsuit, as the case information will appear on it. If you have not received a copy of the notice, then it is a little trickier to track down the lawsuit, but you can try asking the bank/employer for a copy of the notice they received, searching local court records, or checking your credit reports.
Can you undo the underlying lawsuit?
If you were surprised by a levy/garnishment because you did not know about the underlying lawsuit, then it is worth exploring whether you can set aside the underlying judgment. The older the judgment, the harder it is to set aside. But also, the longer you wait to try and set it aside after learning about it, the harder it is to set aside. So, if you recently learned about a lawsuit through a notice of levy/garnishment, then you should move quickly and speak with an attorney to see what your options may be.
Protections from levy/garnishment
Whether you are able to fight the underlying lawsuit or not, you may be able to save all or part of the property based on a number of protections under California and federal law. Money from many benefit programs, such as Social Security, unemployment, or worker's compensation is fully exempt from levy. Furthermore, a certain amount of wages may be exempt, either because they fall within a certain threshold, or because the wages may be necessary to support your household. More information about exemptions, and the process for claiming them, is available from the Judicial Branch website here.
Should you file bankruptcy?
If there is no way to undo or fight the underlying lawsuit, then the next question for most consumers is whether they should consider bankruptcy. Bankruptcy may be the best option for some people, but not all. Whether it is appropriate for you depends on a number of factors, such as your total debts, types of debts, your assets, goals, etc. Our office no longer files bankruptcy cases, but we do advise you to seek assistance from a bankruptcy attorney if you think you may need to file a petition.