If you’re already struggling financially to pay your debts and other financial obligations, the last thing you need is to have your income lowered by wage garnishment. Some creditors don’t have the option to order your employer to take money from your paycheck to make payments or don’t go that route.
However, in some cases, they do. Child support, taxes and student loans are three such obligations that can warrant wage garnishment without the creditor first having to go to court.
If you’re considering filing for bankruptcy at least in part to end the garnishment of your wages, it’s important to know whether that indeed will stop it. You may already know that when a person files for bankruptcy, that places what’s called an “automatic stay” on collection calls and notices and actions like foreclosures.
Chapter 7 and wage garnishment
Chapter 7 involves the liquidation of some assets and the discharge of most debts. However, some debts, like child support, taxes and student loans, aren’t dischargeable. Therefore, if your wages are being garnished to pay those, a bankruptcy won’t necessarily stop the garnishment. If they’re being garnished for other debts that you discharge, then it should end.
The reason we say “should” is because the garnishment is supposed to end with the paycheck after you file for bankruptcy if the garnishment is for a dischargeable debt. However, it’s best to notify your employer and ensure that neither they nor the creditor is violating the court notice.
Chapter 13 and wage garnishment
This type of bankruptcy involves developing and adhering to a three-to-five-year repayment plan. Often, as long as you remain in compliance with your plan, the wage garnishment will end. However, in some cases, the repayment plan involves wage garnishment.
As you can see, there aren’t a lot of concrete answers to the question of whether bankruptcy will end wage garnishment. That’s why it’s always wise to seek legal guidance to discuss your goals for bankruptcy before taking this step. However, bankruptcy can help you get control of your finances, which can – at least eventually – get to keep your entire paycheck.