Legal Question in Bankruptcy in Maryland
Bankruptcy Question
Under the Bankrupty Law for the state of Maryland, do we have to return funds garnished from a debtor's pay thru legal proceedings, since the debtor has filed for bankruptcy.
1 Answer from Attorneys
Re: Bankruptcy Question
If you received the funds pre-petition (before the filing date of the bankruptcy), the answer is maybe. For any funds received post-petition, the answer is yes, you do have to return them. For wages garnished and paid over pre-petition, generally the only way these can be recovered is as a preference, which requires that they be paid within 90 days of the petition date (one year if you are an "insider"), and that the total received in that 90-day period exceed $600 if it is a consumer bankruptcy case. There are other requirements and defenses which may apply, so see an experienced bankruptcy lawyer if there is much at stake.
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