Stopping Wage Garnishments During a Chapter 7 Personal Bankruptcy

In many cases, an individual’s financial difficulties may be magnified when a creditor threatens to, or actually does, takes away a portion of that individual’s source of income. One of the most stressful issues that you are likely facing if you are balancing a heavy debt load is whether a creditor is able to garnish your wages—potentially reducing your ability to satisfy other obligations and support your family.

Stopping wage garnishments during a Chapter 7 personal bankruptcy is possible, however, and an experienced bankruptcy attorney will understand how and when preventing wage garnishment may be accomplished.

When Can a Creditor Garnish a Debtor’s Wages?

Typically, a creditor first must sue a debtor and obtain a judgment in the court in order to be entitled to garnish their wages. However, certain “creditors” are excepted from this general rule and include those with claims for:

  • Student loans
  • Child support
  • Taxes

Typically, however, the creditor must obtain a money judgment in court, after which the creditor may obtain an order to garnish the debtor’s wages. The creditor must then send that order to the employer in order to garnish the individual’s wages. Stopping wage garnishments during a Chapter 7 personal bankruptcy may, however, be an option. For more information, contact a well-established attorney.

Impact of Chapter 7 Personal Bankruptcy

The bankruptcy automatic stay stops wage garnishments during a Chapter 7 personal bankruptcy. This automatic stay essentially prevents creditors from continuing with any collections efforts while the stay is in effect—usually throughout the entire time period when the bankruptcy case is pending. Despite this, debtors should understand that there are exceptions to this general rule, including, for example:

  • Prior Bankruptcy. The automatic stay typically lasts only 30 days if the debtor has filed for bankruptcy within the past year and the case was dismissed. If the debtor filed for bankruptcy twice within the past year, the automatic stay does not apply at all and wages can continue to be garnished.
  • Child Support. The automatic stay does not prevent actions to collect child support, including wage garnishments.

The debtor may, however, file a request with the court that the automatic stay is applied even if an exception would otherwise apply.

Contacting the Employer

Stopping wage garnishments during a Chapter 7 personal bankruptcy requires contacting the debtor’s employer. Because the court often will not provide creditors with the relevant documentation for a week or more, an attorney can provide the employer and the creditor with information such as the debtor’s bankruptcy case number in order to quickly stop the garnishment. Once the creditor has received notice of the bankruptcy, he or she must stop the wage garnishment to avoid violating the automatic stay.

In some cases, it is even possible for the debtor to recover wages that were garnished within the 90-day period preceding the bankruptcy filing. This may be the case if the amount garnished was more than $600 and a bankruptcy exemption would have applied to protect the amount the debtor seeks to recover.

An Attorney’s Role in Stopping Wage Garnishments During a Chapter 7 Personal Bankruptcy

An experienced bankruptcy attorney will understand the rules for stopping wage garnishments during a Chapter 7 personal bankruptcy. Contacting an attorney as soon as possible once you have been notified that your wages will be garnished is important, as the attorney can help you determine whether filing for Chapter 7 bankruptcy is advisable in your specific case. Call today to set up a consultation.