The process of wage garnishment can be very upsetting for individuals. Wages can be garnished when a creditor does not receive payment from an individual and receives an order of garnishment from a court. As a result of wage garnishment, money is directly transferred from a person’s paycheck to the creditor, which can result in significant financial obstacles. Some individuals decide to file Chapter 13 or Chapter 7 bankruptcies in an effort to prevent wage garnishment. After filing for bankruptcy, an automatic stay is placed that ends collection activity from a creditor. Provided that certain conditions are satisfied, individuals are often able to receive some of the wages that were garnished before a bankruptcy petition was filed. If an individual is over $600 in aggregate wages garnished and has a sufficient amount of exemptions to cover these debts, individuals can often successfully request a creditor to return garnished wages.
The Role of Automatic Stays
An automatic stay results in wage garnishment being stopped so long as a bankruptcy stay remains in effect. If a creditor wants to resume debt collection efforts, the creditor must ask the court to lift the bankruptcy stay. A court will require the creditor to provide a valid reason why the stay should be lifted. It should be noted that automatic stays do not apply to domestic support obligations including alimony or child support, which are classified as priority debts that are unaffected by automatic stays and cannot be discharged through bankruptcy.
How Bankruptcy Stops Wage Garnishment
Wage garnishment typically only ends if an individual’s debts are settled or bankruptcy places an automatic stay on the collection. In a large number of cases, an individual receives an automatic stay from debt collection immediately after filing for bankruptcy. In addition to collecting an amount from a person’s paycheck, wage garnishment will also often result in the end of foreclosures, letters, phone calls, and repossession by a creditor. In a Chapter 13 bankruptcy, the wage garnishment will stop for several years as an individual works through a repayment plan, while in Chapter 7 bankruptcy each state’s exemptions provide protections against wage garnishment.
Advice on Getting Wage Garnishment Quickly Stopped
After a person files for a bankruptcy, it is often required for the individual to list all creditors so that these parties can be notified of the impending bankruptcy. There is still a risk, however, that creditors will not be alerted in time to place a stop on garnishment. As a result, individuals are recommended to provide notice of the bankruptcy to the payroll department of their employer.
Contact a Knowledgeable Bankruptcy Attorney
While an automatic stay ends when a bankruptcy case ends, if bankruptcy discharges the debt that was being subject to wage collection then a creditor cannot continue wage garnishment. Ending wage garnishment by declaring bankruptcy can stop harassment from creditors and makes financial situations much easier for individuals. If you would like to speak with a knowledgeable bankruptcy attorney about wage garnishment, do not hesitate to contact Attorney Jim A. Lyon.