Are you one of the thousands of people who think that filing bankruptcy is only beneficial for those individuals trying to get out of debt? Well after this blog you will understand that eliminating debt is just one reason that people choose to file bankruptcy. In today’s economy creditors will do whatever it takes to get paid, and garnishing wages is one of their first choices. For a creditor, access to garnish a debtor is great because it is court ordered and there are only 2 ways to stop it: completely paying the debt back or filing bankruptcy. That’s right – you can bring a garnishment to a halt just by filing Chapter 7 or Chapter 13 bankruptcy. Here’s more information about exactly how it works:
On the day that your bankruptcy is officially filed with the courts a notice of filing is mailed to all of your creditors. This notice of filing will inform them that an “automatic stay” has been put into effect. The automatic stay is essentially an umbrella of protection over you that says no one can attempt to collect a debt from you any longer. Once this stay is in place your creditors must adhere. Therefore, the company garnishing your wages loses the right to do so on the day your case is filed. This occurs because of what a garnishment really is: a court order. The only item that trumps a court order is another court order, and in this case the “automatic stay” is a direct order from the bankruptcy court.
As with any legal process there are exceptions. One type of garnishment that filing a bankruptcy typically cannot stop is one where the government is the creditor doing the garnishing. If you are being garnished by the government for debts such as child support, alimony, or back taxes then you should inform your bankruptcy attorney as soon as possible so that he/she can find out what a bankruptcy will be able to do for your specific situation.
Garnishments can be detrimental to your finances. In most cases it is legal for creditors to garnish up to 25% of your gross wages, and if you are being garnished by the government they may be able to take much more. Filing Chapter 7 or Chapter 13 bankruptcy to end a garnishment can allow you to start seeing your full paycheck again which will help you in your goal of becoming financially free. If you are being garnished and do not know where to turn then it may be time for you to contact a local bankruptcy attorney to see if filing would be beneficial to you.