Can Filing For A Bankruptcy Stop Wage Garnishments?
Yes, filing for bankruptcy will generally stop your wages from being garnished. Some people who are suffering from their wages being garnished. Or who are under the threat of wage garnishment, often turn to Bankruptcy as a strategy to regain control of their finances.
Filing for bankruptcy (either chapter) will usually stop most types of wage garnishments. As well as prevent creditors from seeking new garnishment orders against you.
When you file for bankruptcy, the courts’ issue what is called an ‘Automatic Stay’. This authority comes from the U.S. Bankruptcy Code and prevents creditors, collections agencies, and others from pursuing you for any further.
By law, all wage garnishing activities must stop as soon as your creditors are made aware of the bankruptcy. Either by notification from the bankruptcy court or by notification from your lawyer. If they do not stop collection actions, they can be charged with contempt of federal bankruptcy court.
However, certain types of debt can still be garnished during an automatic stay, because they are high priority and considered ‘non-dischargeable’ such as child support and alimony.
For How Long?
The automatic stay will remain in effect until your bankruptcy case is either discharged or dismissed. If your case is discharged then your debt will be as well and your wage garnishments are over. However, if your case is dismissed and the court finds that you do not qualify for discharge then your wage garnishments will resume once again.
If your wages are being garnished, creditors are harassing you, or you are feeling stress as a result of your financial situation then bankruptcy could be a useful strategy in clearing your debt, stopping wage garnishments, and getting you a fresh financial start.
Having a lawyer to assist you in filing for bankruptcy is not required, but due to the complexities of the filings, it is advised. Devon Barclay is always available for a free consultation.
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