Hi there, I am Aiden Muzzel. I am well versed in bankruptcy proceedings, so I would like to share my knowledge with you through my site. I started my adult years with minimal knowledge of money management. As a result, I ended up way over my head in debt. I was working two jobs and paying all of my income to the debt accounts without making a dent in the total. It turns out I was simply paying late fees and interest with my funds. I sought out legal representation to learn more about how bankruptcy could help me end the cycle and start over. My bankruptcy attorney helped me fill out paperwork, file documents and attend court proceedings. Within a year, the judge discharged the eligible debt accounts. I hope to explore bankruptcy in more detail on my website. I hope you come back soon to learn more.
If you are unable to pay your bills, there are a number of consequences to be aware of. Creditors can make your life miserable with debt collection letters and calls, you can lose your property to foreclosure or repossession, you might be sued, and much more. One of the most hard-hitting of those consequences is wage garnishment. Read on to learn how this technique works and what you can do to put an "automatic stop" to it.
What is wage garnishment?
When a creditor wins a judgment in court, one of the methods for collecting on that payment is through wage garnishment. There are laws that limit the percentage of your salary that can be garnished, but many people will definitely miss the funds that disappear from their paychecks. This legal method of seeking debt repayment orders your employer to remove a certain percentage of money directly from your paycheck before you receive it. Most workers can ill-afford to lose any portion of their hard-earned pay.
Two types of wage garnishments
The law allows some creditors to automatically be granted wage garnishment powers without having to seek a court judgment. These are child support enforcement authorities, the IRS and some student loan servicers. When a creditor, such as a medical facility or a collection agency, wants to seek wage garnishment they must do so using a court judgment and order of garnishment. This distinction is very important if you find yourself having to declare bankruptcy because of continuing financial problems.
The automatic stay
With a chapter 7 bankruptcy filing, a powerful legal act is unleashed. The automatic stay takes effect immediately upon your federal filing and stops quite a bit of collection and garnishment activities. This stay on collection actions has far-reaching effects, but it also has a big effect on wage garnishment activity. While you can consider the automatic stay to be beneficial for most people who've had to file bankruptcy, it actually is meant to assist the bankruptcy courts in taking control over your financial situation. With a chapter 7 filing, neither you nor your creditors have any further control over who gets paid; only the bankruptcy court can decide that.
Stop the garnishment and eliminate the debt
With a bankruptcy filing, if your wages are being garnished by a certain class of creditor you can not only expect to be receiving your full salary again but to never have to pay another penny of that debt. This class includes medical collections, credit cards, personal loans and court judgments. If the debt is unsecured and is included in your chapter 7 bankruptcy filing then the garnishments will cease and no further garnishment will be allowed.
Exceptions to the stay
Unfortunately, certain debts will remain after the bankruptcy, but garnishment activity during the bankruptcy process will cease temporarily. Garnishment and collections will resume after the bankruptcy final discharge. This includes taxes owed and some student loan debts. Child support is a notable exception: wage garnishment will continue unabated until you've paid what's owed.
Speak to a professional like Charles J Schneider PC to learn more.
Share8 August 2018
