One of the worst things that could happen when you are already struggling with financial problems is having your wages garnished by the creditors. If you are behind on your payments, your creditors can obtain an order from the court. This orders your employees to send some part of your paycheck directly to the creditors, leaving you with a reduced income to pay for your essential expenses and other debts. Wage garnishment can happen for different kinds of debts, including medical bills, alimony, child support, credit card debt, student loan, personal loan, taxes, etc. Before obtaining a wage garnishment order, the creditor needs to sue you in court. However, you are provided a chance to appear before the court to oppose the order. A court hearing is not required for some priority debts like alimony, child support, taxes, or student loans.
A bankruptcy filing can stop wage garnishment
Bankruptcy can temporarily halt the wage garnishment. In addition, an injunction known as the automatic stay is put in place when you file for bankruptcy. This prevents creditors and collection agencies (both government and private) from pursuing you for debt collection till your bankruptcy case continues. Again, this provides you with temporary relief till you can sort out the financial mess.
The automatic stay begins when you file for bankruptcy, whether business or individual, irrespective of the bankruptcy chapter. All your creditors are informed of your bankruptcy filing, and they must stop wage garnishment. If they fail to do so, they can be charged with contempt of the court. Some non-dischargeable high-priority debts like alimony and child support might still be garnished. In chapter 13 bankruptcy, the automatic stay also extends the benefits to co-signers of the loan. To continue wage garnishment, creditors need to provide a good reason that most unsecured creditors are unable to.
The automatic stay remains in place until you get a bankruptcy discharge or your case is dismissed. If the debt for which the wage was garnished is discharged in bankruptcy, the creditor cannot pursue you. However, if the debt survives bankruptcy, the wage garnishment will continue.
Are there other ways to stop wage garnishment?
Apart from bankruptcy, there are other ways to stop wage garnishment. These include –
- Petitioning the court to limit wage garnishment due to economic hardship.
- Ask for the appointment of a trustee by the court to pay creditors in lumpsum.
- Check for wage garnishment exemption law in your state and ask the court to stop it due to exemption qualification.
- If the creditor violates the wage garnishment principles by taking more than 25% of your disposable income. Suppose the creditor violates the state laws regarding wage garnishment. In that case, you can seek a legal solution to stop them from doing so.
- Negotiating a settlement with the creditor via a non-profit consumer credit counseling service.
The best way to avoid wage garnishment is to remain current on your debt payments and communicate with your creditors in case of any financial problems. If your creditor has sued you for non-payment, responding to the wage garnishment order is recommended. If you have decided to file for bankruptcy, hiring an experienced lawyer is recommended. They might be able to help you recover previously garnished wages. If you are looking for options regarding ways to deal with your current financial situation, call 888-297-6203 to discuss your options with experienced bankruptcy lawyers in Los Angeles.