Q: Can I make an offer to settle and stop a garnishment? I have a judgement & garnishment against me for an auto.
Also, would this prevent having to file bankruptcy?
A: You can certainly make an offer or lump sum payment to stop a garnishment, assuming the creditor will agree. This will not keep you from filing bankruptcy, however a large payment to a creditor within 90 days of the date you file bankruptcy would be deemed a preference, or a preferential payment, to the creditor. These preference payments can be recovered by the bankruptcy trustee if they are within the 90 day window. It does not keep you from filing, however, in this instance, the money would be taken from the auto creditor and be given to the bankruptcy trusree.
The bankruptcy trustee would distribute the recovered funds to your creditors, after the trustee takes his or her expenses fees . As you can see, if you were to file bankruptcy within 90 days of making such a payment, your settlement payment would be a wasted effort and expense. My suggestion is that you immediately meet with a bankruptcy attorney to plan the best course of action. Your plan to settle the judgment and garnishment issue with the creditor may make sense, IF you have no other reason to file bankruptcy in the foreseeable future.
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