Having unpaid debt can be overwhelming. As debts pile up, creditors can gain court orders to begin to garnish your wages—only making your financial problems worse. In the case of certain debts like taxes, child support, or student loans, creditors can even force your employer to withhold a portion of your paycheck without a court order. Many clients wonder if bankruptcy can help stop wage garnishment and provide relief to their dire financial situation. Below we’ll lay out the basic facts you should know about bankruptcy and wage garnishment.
Can Bankruptcy Stop Garnishment?
When you file for Chapter 7 or Chapter 13 bankruptcy, the courts issue an automatic stay on all debt collection, foreclosure actions, and some wage garnishments. Any debt collection calls will stop until your case is dismissed or your debts are discharged after the successful completion of your case.
When filing Chapter 7 bankruptcy, any wage garnishments that are a result of delinquent child support, taxes, or student loans will not be stopped as a result of your bankruptcy filing. This is because debts such as child support and student loans are considered priority debts and are subject to special treatment in bankruptcy. Wage garnishment will likely stop for debts that are outside of this category, as they will fall under the automatic stay that is issued once you file for bankruptcy.
If you are in good standing with your repayment plans, courts will put an end to wage garnishment. This will assist you in saving up money to pay off debt.
Parker & DuFresne
Putting an end to wage garnishments can help put you on the path toward financial freedom. Bankruptcy is a great choice for many individuals facing difficulties with their finances. With Parker & DuFresne at your back, you can move smoothly through this lengthy process. Contact us today for a free consultation.