Struggling with debt can often go from manageable to a tailspin in a few short months. One of the most common ways this happens is when a creditor wins a judgment at which point they are allowed to start garnishing your wages.
If a creditor is garnishing your wages, you will be able to stop the garnishment and even get some of your garnished wages back by filing bankruptcy. However, certain exceptions do apply.
If your wages are being garnished, or you fear they soon will be, filing for bankruptcy will stop the garnishment in most cases. This happens because bankruptcy’s automatic stay prohibits most creditors from continuing with collection actions during your bankruptcy case.
Most creditors cannot garnish your wages without first suing you in court and getting a money judgment. There are a few exceptions, for example: student loans, taxes, and child support. Once a creditor has a judgment, it can get an order to garnish your wages from the court. The sheriff or marshall forwards the order to your employer, who then holds back a portion of your wages each pay period and sends that amount to the creditor.
When a bankruptcy is filed, a special provision of the bankruptcy code kicks in and stops most creditor actions to collect debt, including garnishments. The special provision of the bankruptcy code is Section 362 and is called “the Automatic Stay.”
There are limits to how much the employer can garnish from your pay check each month and you may be able to protect even more using exemptions.
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