Wage garnishments can be the kiss of death for consumers who are barely getting by. If your wages have been garnished and you feel you are in this category, don’t despair, you are not alone. It turns out that 80% of employees in the United States live paycheck to paycheck with nothing left at the end of the month.
Creditors who are trying to collect past-due accounts or have a judgment against you will often try to collect those debts by garnishing wages. Depending on the type of debt, wage garnishments can take a quarter or 25% of your basic take-home pay. This is the amount your employer will send to your creditor, and you’ll end up with the rest, a much smaller paycheck. The problem is that most people can barely make it on their current take-home pay, so taking 25% will cause a cascading effect, meaning you won’t be able to pay your other bills, or worse, you won’t have any money left. for food.
Note: If you have child support wage garnishments, all bets are off and the 25% does not apply
Bankruptcy can stop most types of wage garnishments
If you file for Chapter 13 bankruptcy, you can prevent wage garnishment or stop existing wage garnishments, at least while the proceeding is in progress. This is because an “automatic stay” begins upon filing bankruptcy. The automatic stay is a court order or injunction. Ask your bankruptcy attorney how long your automatic stay will last, depending on your situation.
If you have a child support wage garnishment, your bankruptcy attorney can make it temporarily stop, but since these types of garnishments are in a different category, you won’t be able to discharge money owed in Chapter 13 bankruptcy, but it will. you will be allowed to present a 3-5 year plan, as long as you are making the plan payments. The court must then approve the plan. You will need a good lawyer to help you get your plan approved and you can move forward.
If I file for Chapter 13 Bankruptcy; How long does it take to stop wage garnishments?
It usually takes 10 days or less for the court to process and send the information/notice to your creditors. It is important that your bankruptcy attorney immediately call your employer and fax the sealed court order and/or case number, specific court, and filing date. Sometimes all it takes is a quick phone call and fax to your employer’s payroll department. An official certified letter from a lawyer with the attached documents can then be sent for follow-up.
If this is not done quickly, your employer may not catch up in time and deduct the wage garnishment from your next paycheck. Time is of the essence. These things will not happen without action.
Can I get money back from wage garnishment that has already been taken out of my paycheck?
Yes, it is possible to recover some of the money withdrawn in the wage garnishment before you filed for bankruptcy, although it is very difficult to recover money that was withdrawn more than 90 days before. A good bankruptcy attorney in your area can explain how it works, why it’s difficult, and how much it will cost. There will be additional paperwork to file with the court, and in some states you may need a “bankruptcy waiver” filing so that you can keep and protect that money from bankruptcy proceedings.
Yes, this can get complicated, but an experienced bankruptcy attorney knows the bankruptcy laws in your state and can figure out how to proceed. Because there is a ‘real cost’ to filing more paperwork or lawsuits to get the money back, he may decide to waive that cost. Your lawyer will explain.
After the bankruptcy proceedings are finished, will my creditors restart my wage garnishment?
After your bankruptcy, your creditors can only place wage garnishments on non-dischargeable debts. Any debt discharged by bankruptcy is no longer owed and is considered uncollectible by the court. Your creditors cannot restart wage garnishments on any of those old debts. If they tried, that money is not owed and your former creditors would be in violation of a court order.
How can I get more information about my legal rights in bankruptcy?
Since bankruptcy law is a moving target, and since laws vary from state to state, it is best to find an experienced bankruptcy attorney who is licensed in your state. Ask them any questions you have and listen carefully to their responses. Bankruptcy sounds unappealing to many, but it can be a powerful strategy to get your financial situation back on track.