Can filing for bankruptcy stop a wage garnishment?

| Mar 9, 2020 | Bankruptcy Law Basics, Wage Garnishment

Are you facing a wage garnishment due to unpaid debts? Filing for bankruptcy might put a stop to all garnishment activities.

Bankruptcy is a very handy tool for consumers to use when they are saddled with debts that it will be impossible for them to pay. While many debts can be wiped out via bankruptcy, it does not always cancel all debts you may have accrued.

Got a garnishment?

Filing for Chapter 7 or Chapter 13 bankruptcy protection triggers an automatic stay. This stay covers foreclosure and collection activities and many wage garnishments. The stay will typically remain in place until your debts are discharged or your case is closed for other reasons.

Wage garnishments that might not be covered

In most circumstances, if your wages are being garnished for non-payment of child support, back taxes or student loan debts, you will still be on the hook for these debts.

How will my company determine when to stop garnishing my wages?

The court will receive your bankruptcy filing and issue an automatic stay to all covered collection activity immediately. This notification is passed onto your employer instructing them to cease garnishment activity. Your creditor will also receive notification that their payments have been stopped.

How soon will the garnishment stop?

By your next paycheck, all eligible garnishments should be removed. It is advisable to notify your employer so that they can be on the alert for the cease and desist order. However, creditors can file to have an automatic stay lifted, and the court’s stay could be lifted.

Why would the automatic stay get lifted?

Those who have filed for bankruptcy more than once sometimes have their creditors get the stays lifted.

My employer or creditor violated the automatic stay and still is garnishing my wages

Make sure that the company or creditor did indeed receive notification of the automatic stay that’s in place. You may be able to get garnished wages returned to you. If all else fails, your attorney can notify the bankruptcy court via a filed motion for violation of the automatic stay.

Because bankruptcy laws are quite complex and often in flux, it is usually advisable to leave the filing of your bankruptcy petition to a legal professional.