Everyone has been in a position where they are forced to delay a payment or overcharge their credit accounts. Sometimes, in order to afford the necessities of living and stay afloat, there is no other option.
However, additional financial hardships arise for individuals who miss consecutive payments or amass substantial credit card debt. Such difficulties include being sued by one’s creditors for the money owed.
If your creditors take legal action, you, as a debtor, face having your wages garnished until the debt is paid in full. Wage garnishment can be disastrous for individuals living paycheck to paycheck.
This is because large portions of your paychecks will now go straight to your creditors. Depending on the amount of debt you owe, you may not be able to support your lifestyle with the funds you have left.
If you are in this situation, we are here to tell you that there is a solution. By filing for bankruptcy, you have the opportunity to stop wage garnishment and develop a plan for taking back control over your finances.
When you face having your wages garnished, there are only a few exempt sources of income. Generally, wages, bonuses, and tips are the most common forms of income garnished.
In credit card and automobile debt cases, up to 25% of an employee’s wages can be garnished. However, this percentage increases significantly if the debtor owes money for child support and taxes. In this instance, a debtor may experience wage garnishment of up to 65%.
Incomes exempt from garnishment include social security disability benefits, workers compensation, unemployment benefits, pensions, retirement plan income, and veteran’s administration benefits.
Keep in mind, though, that some of these exemptions can still be garnished if your debt consists of unpaid child support and taxes.
Fortunately, debtors can avoid garnishment of wages by filing bankruptcy. When an individual files for bankruptcy, regardless of the type filed, a provision known as “automatic stay” goes into effect.
Once this occurs, any wage garnishments immediately come to a halt. In addition to current garnishments, creditors cannot pursue any new garnishment orders against you while the automatic stay remains.
The purpose of the automatic stay is to allow debtors to formulate a plan to manage their debt. After filing bankruptcy, debtors experience the protection of automatic stay until receiving a bankruptcy discharge or a dismissal of their case.
Note that a creditor can still garnish wages even while the automatic stay is in effect if the debtor owes money for child support and taxes.
For some debtors, exemptions may exist that allow one to avoid the garnish of wages. For example, social security, disability, and retirement plans are naturally exempt. Each state has guidelines for what can and cannot be exempt from wage garnishment.
Therefore, it’s important to conduct additional research to discover all of your options.
Furthermore, other legal defenses arise when creditors violate your rights by garnishing exempt wages. If you have experienced this situation, you may be able to recover the total amount that was wrongfully garnished.
Finally, if you qualify, debt counseling is an alternative to filing bankruptcy that allows you to develop payment plans directly with your creditors.
When in doubt about your financial situation, consider discussing filing for bankruptcy with an experienced bankruptcy attorney. Not only will an attorney help you navigate your bankruptcy case and important deadlines, they can also help safeguard your wages from being garnished by creditors.
To achieve a secure financial future, you cannot just sit by and give in to the demands of your creditors. Instead, contact a lawyer, develop a plan, and fight back!
If you’re thinking about filing for bankruptcy in Florida, it’s important to meet with a bankruptcy attorney. You can better understand your specific situation and the types of relief that might be available to you.
Call us today for a free consultation and we’ll get you on your path toward financial freedom.
Dealing with bankruptcy doesn’t have to be a single-person job. The bankruptcy lawyers at Parker & DuFresne will help you determine the best course of action to help you get out from under your debt and move forward to a debt-free future.
Call today at 904-733-7766 for a free consultation, or click the button at the top of the page to schedule online.
Parker and DuFresne