If you are considering bankruptcy, you may be wondering if filing for it will stop wage garnishment. The answer is that it depends on the type of bankruptcy you file and that is why it is so valuable to have a bankruptcy attorney as your ally in times like these.
Key Takeaways
- Chapter 7 vs. Chapter 13: Chapter 7, known as liquidation bankruptcy, stops wage garnishment immediately through an automatic stay. In contrast, Chapter 13, which is a reorganization, may not stop garnishment immediately but limits it through a payment plan.
- Importance of the Automatic Stay: The automatic stay is a court order that prevents creditors from continuing with collection actions, including wage garnishment. This stay lasts until the debt is discharged in Chapter 7 and during the repayment plan in Chapter 13.
- Legal Advice: Having a bankruptcy attorney is advisable to ensure the process is done correctly and to receive legal representation if necessary. An attorney can also help negotiate with creditors to stop wage garnishment without filing for bankruptcy.
Thinking about filing for bankruptcy? You should know this about your wages
Will bankruptcy stop garnishment? If you file for Chapter 7 bankruptcy, wage garnishment will usually stop immediately. This is because all of your assets are liquidated and used to pay your creditors. However, if you file for Chapter 13 bankruptcy, wage garnishment may not stop immediately and the reason is because your assets are not liquidated and you are instead placed on a repayment plan.
Ultimately, whether or not filing for bankruptcy stops wage garnishment depends on the type of bankruptcy you file.
What is wage garnishment?
Wage garnishment is a legal process by which a creditor can require an employer to withhold a portion of an employee’s wages and pay it directly to the creditor. This is usually done to settle a debt that the employee owes.
This process can be stopped by filing for bankruptcy, but only if the right type of bankruptcy is filed.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is also known as liquidation bankruptcy. This is because all of the debtor’s assets are sold to pay off his or her creditors.
Once a Chapter 7 bankruptcy is filed, an automatic stay goes into effect. This means that creditors cannot take any action against the debtor, including wage garnishment.
Therefore, if you are facing wage garnishment and you file a Chapter 7 bankruptcy, the wage garnishment will usually stop immediately.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is also known as reorganization bankruptcy. This is because the debtor’s assets are not sold but rather put into a payment plan. An automatic stay also goes into effect when a Chapter 13 bankruptcy is filed, but it may not stop a wage garnishment immediately.
This is because wage garnishment is considered an “allowed demand” in a Chapter 13 bankruptcy. Therefore, the creditor can still garnish your wages even after you have filed for bankruptcy. However, the amount that can be garnished is usually limited.
How to stop wage garnishment? Should I file for Chapter 7 or Chapter 13 bankruptcy?
The type of bankruptcy you should file depends on your individual circumstances. Chapter 7 bankruptcy may be a good option if you have very few assets and want your debt discharged as quickly as possible. Chapter 13 bankruptcy may be a better option if you have more assets you want to keep and if you can afford to make the monthly payments.
We’re sure you want to know how to stop wage garnishment immediately then you should know that only Chapter 7 bankruptcy will stop a wage garnishment immediately. If you file for Chapter 13 bankruptcy, wage garnishment may still be allowed, but it will be limited. Ultimately, the decision about what type of bankruptcy to file should be made in consultation with a bankruptcy attorney.
What does the “automatic stay” have to do with bankruptcy?
An automatic stay is a court order that prevents creditors from taking any action against the debtor [1]. This includes wage garnishment. An automatic stay goes into effect when a bankruptcy case is filed, but it only lasts for a set period of time. In a Chapter 7 bankruptcy, the automatic stay usually lasts until the debt is discharged. In a Chapter 13 bankruptcy, the automatic stay usually lasts as long as the repayment plan lasts.
How can I stop wage garnishment if I’m already in a Chapter 13 bankruptcy?
If you’re already in a Chapter 13 bankruptcy and you’re facing wage garnishment, you may be able to stop the wage garnishment by filing a motion with the court. This motion is known as a “Motion to Modify Automatic Stay.” If the court grants your petition, the wage garnishment will be stopped.
Can I stop a wage garnishment without filing for bankruptcy?
There are other ways to stop wage garnishment, but they usually require reaching some sort of agreement with the creditor. For example, you may be able to negotiate a payment plan that will satisfy the debt without resorting to wage garnishment.
Or, you may be able to discharge the debt through a different process, such as student loan forgiveness. If you are facing wage garnishment and are unsure of what to do, you should speak with an attorney to discuss your options.
Do I need an attorney to file for bankruptcy?
It is not required to have an attorney to file for bankruptcy, but it is generally a good idea to have one. Bankruptcy can be complicated, and an attorney can help make sure everything is done correctly.
Additionally, an attorney can represent you in court if necessary. If you are facing wage garnishment and are considering filing for bankruptcy, you should speak with a bankruptcy attorney to discuss your options.
What are the benefits of hiring an attorney when filing for bankruptcy?
Hiring an attorney when filing for bankruptcy has several benefits. First, as mentioned above, an attorney can help ensure that everything is done correctly. This is important because bankruptcy can be complicated and even small mistakes can have big consequences.
Second, an attorney can represent you in court if necessary. This is important because if you have to go to court, you want someone on your side who knows the ins and outs of bankruptcy law. Lastly, an attorney can give you peace of mind.
Bankruptcy can be stressful and having an attorney to guide you through the process can make it much easier.
The bottom line is that if you are facing wage garnishment, you should speak to a bankruptcy attorney to discuss your options. Bankruptcy may be the best way to stop wage garnishment and get your finances back on track.
At S&B Legal we can help
If you are considering filing for bankruptcy, contact S&B Legal today. We can help you understand your options and decide if bankruptcy is right for you. We offer free consultations, so you have nothing to lose by contacting us. Contact us to schedule your consultation.
Summary
Considering bankruptcy is an option to stop wage garnishment, but it depends on the type of bankruptcy filed. Chapter 7 bankruptcy stops wage garnishment immediately due to the liquidation of assets and the automatic stay that protects the debtor.
On the other hand, in a Chapter 13 bankruptcy, garnishment can continue, albeit limited, as it is based on a payment plan rather than liquidation. It is crucial to have the advice of a bankruptcy attorney to make the most appropriate decision based on individual circumstances.
Frequently Asked Questions
What is wage garnishment for bank debt?
Wage garnishment is a legal process that allows a creditor to withhold a portion of a person’s wages to settle a debt. This usually occurs when a person has failed to meet his or her payment obligations and the creditor has obtained a court order to enforce the seizure.
When does a garnishment order expire?
The expiration of a garnishment order depends on the laws of the country or state where it is issued. In general, a garnishment order may have a specific duration, after which it must be renewed by the creditor to continue being effective. In some places, garnishment orders may last until the debt is fully paid or canceled for some other reason.
It is important to consult with an attorney specializing in local laws to obtain accurate information about the duration of a garnishment order in your area.
How to stop garnishment?
There are several ways to stop a garnishment, for example:
- Negotiate with the Creditor: You can try to negotiate a payment agreement with the creditor before a garnishment order is issued.
- Declare Bankruptcy: In some cases, declaring bankruptcy can stop a garnishment, although this has long-term consequences on credit.
- File an Objection: If you believe the garnishment is unfair or wrong, you can file an objection with the court that issued the garnishment order.
- Consult with an Attorney: An attorney can help you explore your legal options and can help you negotiate or file the necessary documents to stop the garnishment.
