When you’re struggling to pay your bills, a wage garnishment is likely to make the situation worse. Chapter 7 bankruptcy can help you bounce back, stopping your creditors from taking a chunk of your paycheck every month.
If your wages are being garnished now – or if a creditor is threatening you with wage garnishment – filing for bankruptcy might be your best option. Here’s how Chapter 7 can provide you with the debt relief you need.
The Automatic Stay in Bankruptcy
Filing for Chapter 7 bankruptcy prompts a court injunction called the automatic stay. This freezes nearly all creditor collection activities against you – including wage garnishments – for the duration of the case.
The automatic stay is quite powerful, but as with any law, exceptions apply. The injunction won’t stop garnishments for domestic support obligations, such as past-due alimony or child support. And, creditors have the legal right to ask the bankruptcy court to lift the stay at any point, though this is typically only granted for debts secured by collateral.
Stopping a Wage Garnishment Swiftly
The automatic stay goes into effect immediately after you file for Chapter 7 bankruptcy. However, your creditors may not receive notice from the court for a week or longer – and that means a portion of your next paycheck could still be withheld.
To prevent that from happening, your bankruptcy attorney can notify both your employer and any creditors who are pursuing wage garnishment about your Chapter 7 claim. Once the filing date, court location and bankruptcy case number have been provided, the garnishing of your wages will stop.
What Happens After the Bankruptcy Case Ends?
If your wages are being garnished to pay a debt that’s dischargeable in Chapter 7 bankruptcy – like a credit card balance, personal loan or medical bills — the end of your case should also be the end of your take-home pay being taken by creditors. But to deal with an associated lien, your bankruptcy attorney may need to take additional action.
If your wage garnishment is due to back taxes, student loans or certain other types of debt, filing for Chapter 7 won’t bring it to a permanent stop. It’s a temporary solution, and once the case ends, you’ll need to be prepared for the garnishment to resume. Or, as an alternative, you could file for Chapter 13 bankruptcy.
Debts that are nondischargeable in Chapter 7 bankruptcy can be included in a Chapter 13 repayment plan. Your bankruptcy attorney can make sure your monthly payments are affordable – and as long as you adhere to the repayment plan, you won’t have to worry about your wages being garnished.
If you’re in need of debt relief, the bankruptcy attorneys at the Law Office of Davis & Jones, P.C., can help. To get advice on stopping a wage garnishment, contact our Salt Lake City, Utah, office and schedule a free Chapter 7 bankruptcy consultation today.