In re Harris (Ch. 7 Case No. 13-53254, Adv. No. 14-05019)

The debtor sought to recover as a preferential transfer certain funds from a judgment creditor which also held a default judgment against the debtor’s employer-garnishee.  The creditor argued that once it obtained the default judgment, that the garnishment action was closed and that the garnishee was paying its own default judgment from its own funds rather than paying on the debtor’s debt pursuant to the garnishment.  The employer, however, had continued to withhold funds from the debtor’s paychecks and send those exact amounts to the creditor which then applied the funds on the debtor’s debt as shown by its Account Detail History for the debtor.  The court held that the debtor could recover the funds from the creditor as preferential transfers.

Tuesday, August 5, 2014