Christopher S. Mulvaney, Esq.


If you settle a debt for less than the amount owed, be prepared to receive a 1099-C for imputed income, which is taxable unless you meet the insolvency exception. Consult a CPA. Solvent debtors can hurt themselves with non-dischargeable taxes. Insolvent debtors can hurt themselves due to the opportunity costs of paying creditors and then being forced into bankruptcy anyway.

Be very way of attempting to settle debt with a debt-to-income ratio of 50% or more. Your chance of success is negligible. Debt repayment programs are not run by lawyers. These companies have no fiduciary duties to you and can sell you on a program that has no chance of success because you will be sued and have wages garnished ending your ability to pay creditors.


Most creditors cannot garnish wages without first obtaining a Judgment against you.  Federal student loan servicers, the IRS, state child support agencies, and lenders with whom you have checking or savings account are exceptions to this rule. 

Garnishment is a Court Order requiring your employer to deduct 25% of your net pay (50% for child support pursuant to RCW 6.27.150) from each paycheck for the next 60 days. If your employer fails to do so, then your employer can be sued for the money you owe. Garnishment can be renewed until the Judgment is paid in full, which will take a long time because of the 12% post-Judgment interest rate (RCW 19.52.020) and garnishment fees. You can be fired for repeated garnishments.

Most people cannot live with 25% of their net pay being taken. You are not required to live with it.  Bankruptcy protection immediately stops wage garnishment pursuant to the automatic stay (11 USC 362).

In order for a creditor to get a Judgment, the creditor must file a lawsuit and have the Court enter an order in the creditor’s favor. You are supposed to be personally served with a Summons and Complaint giving you notice that you are being sued. However, that does not always happen. If you fail to respond to a Summons and Complaint in writing within 20 days, the creditor will get a default Judgment against you, and garnishment will be the next step.

You can use the notice of appearance below to get email notice of activity in your case and give yourself additional time to evaluate options.

Notice of Appearance

Garnishments are governed by RCW 6.27.

Nolo has garnishment information. also has garnishment information.

Stop garnishments by contacting MLO in Bellevue, Washington, immediately if you are served with a Summons & Complaint or a Writ of Garnishment, and seeking protection under the U.S. Bankruptcy Code. I am Christopher S. Mulvaney, an experienced bankruptcy attorney, and I will help you understand your options.


In addition to a Writ of Garnishment, Judgment creditors can also file a Writ of Attachment and seize any amount in your bank account up to the amount of the Judgment including the interest and attorney’s fees.  The 25% limitation does not apply to attachment.

Certain property is exempt from attachment under RCW 6.15.010.


Stop Foreclosure Sales – Create Loan Modification Opportunity

Falling behind on mortgage payments is a common problem. If you have received a Notice of Default or a Notice of Foreclosure contact MLO immediately to talk to a lawyer about your rights, and plan the best strategy for you. For many homeowners in the Bellevue, Washington, area that involves negotiating a loan modification. You should remain flexible, so that you have a plan if the modification is not successful. Whatever ends up happening, it is important that you did everything you could to prevent any outcomes you didn’t want.

Chapter 7 bankruptcy can give you a few months to live in the house without paying the mortgage, so that you can save money to move. Second mortgages and Home Equity Lines of Credit are especially dangerous after foreclosure sales because the lender will likely sue you for the balance after the sale. Chapter 7 provides a discharge of that debt.

Keeping your house in a Chapter 13 bankruptcy is extremely difficult and unlikely. You are required to catch up the mortgage arrears over 5 years plus pay the regular payment plus the 5% Trustees fee on the whole amount.

If you are going to be forced into bankruptcy following a foreclosure sale when a mortgage creditor sues you, then it is preferable to file bankruptcy before the sale to give yourself more time to live in the house without paying.

Foreclosure is governed by RCW 61.24 – Deeds of Trust and RCW 61.12 – Judgments.

Foreclosure can be either Judicial or Non-Judicial.  Judicial foreclosures in which the Debtor is served with a Summons and Complaint are rare because their purpose is to obtain a Judgment for the deficiency balance (the difference between the auction price and what is owed) which usually results in the bankruptcy of the Debtor.  Typically, notices of default and foreclosure sale notices pursuant to a deed of trust are used.  No deficiency Judgments are allowed for first purchase money mortgages.  Deficiency Judgments are allowed for HELOC’s and refinances.

Facing Garnishment or Foreclosure? Contact MLO.

If you cannot afford to live with a garnishment, you should talk to an experienced lawyer about your rights as soon as possible.

I offer free and confidential initial legal consultations to potential bankruptcy and estate planning clients. Email me at to schedule your consultation.
I offer evening appointments on-site at my law office, where ample free parking is available.
For more detailed information about my practice in Bellevue, Washington, please consult my Blog.


14205 SE 36th St. Suite 100
Bellevue, WA 98006-1553


Phone: 425-998-6352
Fax: 425-223-3197

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Mulvaney Law Offices, PLLC, is located in Bellevue, Washington, representing estate planning & probate, chapter 7 and chapter 13 bankruptcy, and real estate transactions clients in Seattle, Tacoma, Everett, Bellevue, Redmond, Renton, Issaquah, Sammamish, Maple Valley, Burien, SeaTac, and throughout King, Snohomish and Pierce counties.