Two recent cases discussed the issue of whether wages subject to a pre-petition garnishment order but actually garnished within the 90-day preference period were part of the bankruptcy estate.
In Weinman v. Alternative Revenue Systems, Inc. (In re Stevens), No. 15-11776, Adv. Proc. No. 15-1340 (Bankr. D. Colo. March 23, 2016), the case was before the court on the Chapter 7 trustee’s and Alternative Revenue Systems’s (ARS) cross motions for summary judgment. Prior to the debtors’, Kwanza and Mindy Stevens, bankruptcy, ARS obtained a judgment against Mindy Stevens, and began garnishing her wages. Approximately three months after the Stevens received their chapter 7 discharge, the trustee brought an adversary proceeding against ARS arguing that two garnishments made within 90 days of the debtors’ bankruptcy were avoidable transfers under section 547. ARS countered that the relevant transfer date was the date the writ of garnishment was served on the employer rather than the date of each individual garnishment. Therefore, the transfer took place prior to the 90 day preference period. Read More
