If you are having a hard time covering day-to-day living expenses due to wage garnishment, it can be difficult to find a good solution for paying off debts. In today’s blog, Groce & DeArmon, P.C. offer a solution that could help: Chapter 7 or Chapter 13 bankruptcy. Read on to learn how bankruptcy can stop wage garnishments and how our team of bankruptcy lawyers can help.
Understanding Wage Garnishment
Wage garnishments are court orders that cause your employer to withhold a part of your paycheck in order to pay back a creditor or a person to whom you owe money. Creditors have the right to garnish 25% or more of your wages to repay debts on things such as child support, defaulted student loans, consumer debts, and unpaid income taxes.
The Automatic Stay
Whenever a debtor files for bankruptcy, an injunction called an automatic stay goes into effect immediately. This will quickly stop wage garnishments along with other types of debts, giving debtors a temporary break from financial crisis.
If the debt that led to wage garnishment includes credit card bills, medical bills, or court judgments, they will be wiped out during bankruptcy, permanently stopping the wage garnishment. If you filed for Chapter 7 bankruptcy, these debts may be discharged at the end of the case. If you filed for Chapter 13 bankruptcy, you can include these debts in the bankruptcy repayment plan rather than going through wage garnishment.
It is important to remember that not all debts may be discharged during bankruptcy. In some cases, bankruptcy will only temporarily stop collection of debts and wage garnishment, in which case you will still owe these debts once the bankruptcy is over.
Recovering Previously Garnished Wages
In some cases, debtors can try to recover wages that were garnished before they filed for bankruptcy. But it is important to remember that most of the time this isn’t worth the cost, and that filing for bankruptcy as soon as possible will help you avoid the loss.
If you decide to try and recover garnished wages, remember that it must have occurred at most 90 days before filing for bankruptcy, it must not exceed a particular amount, and the amount you wish to recover will need to be covered by an exemption.
In most cases, there is little to no exemption protection for wage garnishments, and you will have to file a lawsuit in bankruptcy court against your creditor. It’s important to speak with your bankruptcy lawyer to decide whether or not recovering garnished wages is right for you.
Life After Bankruptcy
Remember that creditors are not able to resume wage garnishments on debts that have been discharged, including credit card balances, personal loans, and medical bills. Also remember that creditors are able to resume garnishment for non-dischargeable debts which you will be responsible for paying.
Bankruptcy Attorneys at Groce & DeArmon, P.C.
If you find yourself in financial trouble due to wage garnishment and you think that filing for bankruptcy may be right for you, bankruptcy lawyers Groce & DeArmon, P.C. may be able to help. We offer trustworthy services that can help you decide which type of bankruptcy is right for you. Visit us online or call us at (417) 862-3706.