If you’re living paycheck-to-paycheck and struggling with overwhelming debt, wage garnishment can turn a bad situation into a disaster. Fortunately, there are ways to stop or limit wage garnishment. One of the most powerful methods is through filing for personal bankruptcy.
What is wage garnishment?
Wage garnishment is a practice in which a creditor can get money directly from a debtor’s employer. This only comes about through a court order after the creditor has taken the debtor to court in order to collect an outstanding debt. If the court agrees, it will issue the order instructing the employer to send a portion of each of the debtor’s paychecks directly to the creditor.
This practice is commonly used against people who are delinquent in paying taxes, child support and alimony. It can also come up in cases involving medical bills, credit card bills, student loans and other types of debt.
How bankruptcy helps
When you file for Chapter 7 bankruptcy, the court issues an automatic stay on all attempts to collect debt from you. This means that your creditors may no longer contact you about your debt. They must go through the court instead.
The stay also applies to most types of wage garnishment. Once you file for bankruptcy protection, either your lawyer or the court will notify your creditors and your employer, and they must stop garnishing your wages.
The automatic stay doesn’t stop your creditors’ efforts to collect the debt forever. They may collect some payment through your bankruptcy process. Once the process is complete, the court will likely discharge most of your remaining debt.
This means you will be in a much better position than when you started. Without wage garnishment holding you back, you will be able to save some money again and start rebuilding your financial health.