A wage garnishment can make an already difficult financial situation even harder by reducing the amount of income available for housing, utilities, food, and other everyday expenses. Bankruptcy Lawyers Vegas provides general information about wage garnishments and how bankruptcy may affect certain collection actions.
What Is Wage Garnishment?
Wage garnishment is a legal process that allows certain creditors to collect money directly from a person’s earnings. Depending on the type of debt and applicable law, a creditor may need to obtain a court judgment before wages can be garnished. Different rules may apply to debts such as taxes, child support, and certain student loans.
Can Bankruptcy Stop Wage Garnishment?
Filing a bankruptcy petition generally triggers an automatic stay, which temporarily stops many collection activities. In some cases, this may include wage garnishments related to qualifying debts.
However, the automatic stay does not apply to every type of garnishment. Certain obligations, including some domestic support obligations, may be treated differently. The effect of bankruptcy also depends on the type of debt and the circumstances of the case.
Chapter 7 and Wage Garnishments
For individuals who qualify, Chapter 7 bankruptcy may discharge certain unsecured debts that led to wage garnishment. If the underlying debt is discharged, collection on that debt generally cannot continue after the bankruptcy case.
Not all debts are dischargeable, and eligibility and other bankruptcy requirements apply.
Chapter 13 and Wage Garnishments
Chapter 13 bankruptcy generally allows eligible individuals with regular income to address debts through a court-approved repayment plan, typically lasting three to five years. Certain qualifying garnishments may be affected by the automatic stay while debts are handled through the plan.
Common Reasons for Wage Garnishment
Wage garnishment may result from several types of financial obligations, including:
- Credit card and other consumer debts
- Unpaid medical bills
- Personal loans
- Court judgments
- Certain tax obligations
- Child or spousal support
- Certain student loan obligations
The procedures and protections available can vary depending on the type of debt.
Understanding Your Options
If wage garnishment is reducing your take-home pay, it can be important to understand the underlying debt and the options that may be available. Bankruptcy is one possible way of addressing certain debts and collection actions, but its effects vary based on individual circumstances, the bankruptcy chapter, and the type of obligation involved.
