When you are deep in debt, your creditors can take several different actions to collect money from you, including wage garnishment. This happens when the court orders that your employer can withhold a portion of your paycheck and send it directly to your creditor. This can go on until the debt – and potential legal fees and interest — is resolved, or until you take action to stop it.
The court will send a notice to your bank or employer to notify them, and the garnishment can begin within 5 to 30 business days. There are limits on how much of your wages can be garnished. The court will decide the maximum percentage of your disposable income that is eligible for garnishment. This is often up to 25% of your net after tax wages. So if you bring home $1,500 per paycheck, a wage garnishment would reduce this down to $1,125 if you are ordered to pay the full 25%.
Having your employer involved in your finances can be embarrassing and is something you likely want to prevent or stop as soon as possible.
A legal option available to you to end wage garnishment is to file bankruptcy. Filing for bankruptcy puts an automatic stay in place that will cease wage garnishment.
What Is an Automatic Stay?
An automatic stay is an injunction that prevents creditors, collection agencies, government departments, and almost everyone else you owe money to from attempting to collect the money from you. This will stop the garnishment to your wage and also stops collection letters, harassing collection phone calls, showing up at your house or place of employment, and garnishing bank account balances .
An automatic stay goes into effect as soon as you file for bankruptcy. This is not a permanent hold, and it does not erase your debt. However, it will prevent creditors from trying to collect a debt during your bankruptcy proceedings. Although temporary, for most debts, it the automatic stay does in fact become permanent at the end of the bankruptcy, though its name changes to the discharge injunction order.
How Does an Automatic Stay End Wage Garnishments?
When you file for bankruptcy, the court will notify your creditors that they need to stop collection efforts. They will get a letter informing them of your pending bankruptcy and will let them know of any important dates related to your case, including the meeting of creditors. The letter will also detail the automatic stay order.
These letters can take around a week to be distributed by the court and received by your creditors. Because of this lag, you or your bankruptcy attorney should notify your employer that an automatic stay has been put in place. Your lawyer can provide them with your filing date and case number to end wage garnishment.
Automatic stays are temporary, but at the end of your bankruptcy proceedings, most debts are permanently discharged, putting a permanent end to wage garnishments. Dischargeable debts like credit card bills and medical bills will likely be discharged during your bankruptcy, and your debt will be wiped clean. This means the wage garnishment will be removed permanently. Non-dischargeable debts like child and spousal support obligations will likely not be discharged and you will still be responsible for paying off the debt after your bankruptcy proceedings are over and the automatic stay ends.
When Wage Garnishment Can’t Be Stopped
There are certain types of debt that automatic stays cannot prevent collection attempts for. This can include child support and spousal support. If your wages are being garnished to provide support payments, then filing for bankruptcy will not put an end to your wage garnishments. However, certain bankruptcies will stop garnishments for past due child support. Be sure to ask the attorney what options are available if you are paying past due child support.
Let Us Help You
When you’re facing wage garnishments due to high amounts of debt, let our lawyers at The Law Offices of Alexzander C.J. Adams, P.C. help you sort through your options. We work for you, the people, and not institutions. Contact us for a free case evaluation, or no-obligation consultation. We are dedicated to helping you overcome this small bump in the road and assisting you to get on with your life.