Does Bankruptcy Stop Wage Garnishment?
Many people eager to get their finances under control enter a bankruptcy lawyer's office with one question: Does personal bankruptcy stop wage garnishment? The short answer is yes, though individual cases and outcomes vary.
Bankruptcy & Wage Garnishment
Here's why bankruptcy has the power to stop wage garnishment:
- The automatic stay: This legal protection takes effect as soon as a person files a bankruptcy petition with the court. The automatic stay prevents collection actions of all kinds, including foreclosure, repossession, creditor contact and, of course, wage garnishment. The automatic stay typically remains effective for the duration of a bankruptcy case.
- The debt discharge: One of the powers of the bankruptcy court is to discharge eligible unsecured debts (that is, debts not connected to any property). Once a debt has been discharged by the court, the filer has no obligation to pay it.
- The bankruptcy discharge: A bankruptcy case is officially over when the court discharges it. After this point, any debts discharged are forever erased from the record (although a record of the discharged debt may stay on a person's credit report, the legal obligation to repay them is gone). In other words, once a bankruptcy case is over, a filer has a clean financial slate and gets an opportunity to start over.
To summarize, the automatic stay prevents wage garnishment during the bankruptcy case and the debt discharge can eliminate the debt that triggered the wage garnishment once the bankruptcy case ends.
Garnishment for Non-Dischargeable Debts
In some cases, a filer may find that her wages were garnished for a debt that is not eligible for discharge. Bankruptcy may still be able to help:
- Possible garnishments during the case: Whether a person files for Chapter 7 or Chapter 13 bankruptcy, the automatic stay will typically prevent wage garnishment while the case is active, except for certain debts such as child support and other family support obligations, which may still be garnished.
- Discharge of some debts: Even if the debt connected to garnishment is not discharged, the discharge of other debts may free up enough of a person's income to make payments on the debt after the bankruptcy case concludes.
If you're ready to learn more about what bankruptcy could do for you, please fill out this form to connect with a lawyer in your area today.