Filing Bankruptcy Stops Wage Garnishments
If you are already struggling to pay your debts, having your paycheck garnished can be the end of your ability to pay those debts but it can also mean you will not have the money necessary to pay your living expenses. When your paycheck is suddenly much smaller than normal, you may not have the funds necessary to pay your mortgage payments, rent, and utilities or even buy food for your family. Unfortunately, our courts do not consider this when an order for wage garnishment has been granted. The judges simply review the evidence placed before them by the creditor and then issue an order to your payroll department requiring it to withhold money from your wages to pay the creditor. No one stops to think how a wage garnishment is going to affect you and your ability to provide for the basic needs of your family. If you are facing this stressful situation, you need to consult with an experienced bankruptcy attorney to find out how bankruptcy can stop wage garnishments and give you back the money you have earned.
How does bankruptcy stop wage garnishments?
Regardless of what chapter of bankruptcy you file, from the moment your case is filed you are protected by an automatic stay. The bankruptcy automatic stay prevents creditors from taking any further actions to collect a debt without permission from the bankruptcy court. This includes filing lawsuits, continuing collection efforts, foreclosures, repossessions and wage garnishments. If the wage garnishment has not yet begun, the filing of the bankruptcy case will prevent the wage garnishment from beginning. If your wages are already being garnished before the filing of your case, the wage garnishment must cease as of the date you file your bankruptcy case. If the creditor has received more than $600 from your wages during the 90 days preceding the filing of your bankruptcy case, this money is considered a preferential transfer and may be recovered from the creditor. To make sure that the wage garnishment ends, it is best to serve a copy of the Notice of Bankruptcy on both the creditor and your payroll department immediately upon the filing of your case rather than waiting for the notice to be mailed to the creditors by the bankruptcy court.
The automatic stay remains in effect for the duration of your case unless a bankruptcy judge grants a motion by one of your creditors to lift the automatic stay. The creditor must have a valid reason for requesting that the stay be lifted. An unsecured creditor, such as a medical provider or a credit card company, requesting that the stay be lifted so it can continue wage garnishment is not a valid reason. Furthermore, failure to stop the wage garnishment is a violation of the automatic stay and the parties liable for this failure could be held accountable by the bankruptcy court.
Does a bankruptcy case stop all wage garnishments?
In most cases, the filing of a bankruptcy case will stop wage garnishments; however, there are a few exceptions to this general rule. Payments for child support, alimony or other court-ordered domestic support obligations will continue to be withheld from your salary. However, if you are paying an arrearage for child support, your attorney may be able to include this amount in your Chapter 13 plan and stop the garnishment for the arrearage portion of your domestic support obligation. This is one reason you want to hire an experienced bankruptcy attorney who has years of practice in the bankruptcy court to represent you in your bankruptcy. He will know how to use the bankruptcy laws to help you stop wage garnishment once and for all.
After your bankruptcy case has ended and you have received your bankruptcy discharge, the creditor is forever barred from attempting to collect this debt, including the resumption of wage garnishment. Therefore, the bankruptcy case stopped the wage garnishment and discharged your legal liability to repay that debt in the future.
Attorney Gene F. Turnwald understands how frightening and stressful it can be to receive a wage garnishment order from the court. He has helped hundreds of clients stop wage garnishment through the filing of a bankruptcy case. The bankruptcy case serves a much larger purpose because it allows the debtor to receive a “fresh start” so that he can recover from a financial crisis and begin to rebuild his life and his finances. We offer a free bankruptcy consultation to answer all of your questions about bankruptcy and explain how bankruptcy is a solution to your debt problems. Contact our office today to schedule your free consultation with Attorney Turnwald.