Can a bankruptcy stop wage garnishment?

| Dec 13, 2018 | Firm News |

If you are experiencing financial difficulties, you may not only have trouble paying bills, but you may be having a hard time living from one paycheck to the next. If there is a time you get so behind on your bills that your wages are being garnished, it can make the way you live your daily life extremely difficult.

There may be relief to wage garnished and it may be a solution that can turn your whole financial situation around. That solution is bankruptcy. You may have been considering bankruptcy in the past, but if you are now having as much as 25 percent or more of your paycheck garnished to satisfy creditors, one way you can stop it is by filing for bankruptcy.

How bankruptcy can help

At the time you file for either Chapter 7 or 13 bankruptcy, an automatic stay will go into effect. What this does is stop creditors from contacting you regarding any debt. An automatic stay will also cease any wage garnishments you are currently experiencing. An automatic stay will remain in effect until your bankruptcy is filed. If a creditor that was garnishing your wages is included in your bankruptcy filing and that debt is discharged, you will not be hearing from that creditor after your bankruptcy is completed.

Not included in an automatic stay

An automatic stay will not stop you from having the responsibility to continue to make payments for child support and alimony. If you are behind in child support payments, you may have an instance of receiving an automatic stay, but this is something you will need to work about with your attorney. However, you should plan to continue to make your support payments regardless of your bankruptcy.

Wage garnishment limits

An automatic stay can stop wage garnishment from things like student loans and taxes for a time, but it does not mean these items will be discharged in your bankruptcy. During your bankruptcy you will need to come up with a plan to set-up a payment schedule for these debts because they will not be discharged. The good news is that with other debt being wiped out, you may now have the funds to pay off taxes and student debt without your wages being garnished. If you are unable to come up with a plan to make payments, you can expect the wage garnishment to continue.

While a bankruptcy can be of help when it comes to stopping wage garnishment, there are many aspects to a bankruptcy you need to consider. While stopping intrusive collection tactics can be one benefit of bankruptcy, you should speak with an attorney about what bankruptcy will mean for your overall financial situation.