When you fall behind on your bills, the end result can be a lot of stress. Many people find it nearly impossible to catch up after even a few months of missed or late payments.
Your creditors will often do just about anything to get what they feel is owed to them, even if they have tacked on hundreds of dollars worth of fines, fees and penalties to your account. The end result can be a lot of stress over a financial situation that you no longer have control over.
One of the most insidious ways in which creditors seek repayment is through obtaining a garnishment of a debtor’s wages. Basically, they will serve you with a lawsuit and take you to court.
From there, they will ask the judge to garnish your wages, requiring your employer to withhold some of your weekly income and pay it to them directly.
Obviously, that could be financially devastating for someone on a fixed, tight budget. If you have received a summons for a creditor lawsuit, wage garnishment is likely in your future. Bankruptcy may be the best way to halt those proceedings.
The automatic stay of bankruptcy applies to creditor lawsuits
Regardless of whether you qualify for Chapter 7 bankruptcy or want to file chapter 13 bankruptcy, as soon as you file your initial petition with the courts, you receive what is known as an automatic stay. This stay applies to any and all collection activity. An automatic stay will end collection calls, nasty letters from creditors and pending lawsuits.
Of course, you need to follow through in obtaining your discharge, or the creditors will simply resume harassing you. Thankfully, provided that the account in question qualifies for bankruptcy protections, you won’t have to worry about a second lawsuit after your bankruptcy proceedings.
Once the courts discharge your unsecured debts, it becomes illegal for your creditors to attempt to collect on them in the future.
Bankruptcy can also affect current wage garnishments
If the thought of filing bankruptcy makes you nervous and you have already lost a creditor lawsuit that resulted in wage garnishment, never fear. Filing for bankruptcy protection now will still help you.
It can put an end to the garnishment of your paycheck and result in a discharge of the debt. Bankruptcy will remain on your credit report for seven to 10 years, but a garnishment or judgment would be on there for seven years, anyway.
Each situation is unique, but bankruptcy protections are meant to help those who do not have the means to repay their debts. If you have fallen behind and are in danger of a creditor garnishing your wages, it may be time to consider filing.