Can Bankruptcy Stop a NJ Wage Garnishment?
In short, yes. Filing for bankruptcy can stop a wage garnishment in New Jersey.
Under the U.S. Bankruptcy Code, if you file for a Chapter 7 or Chapter 13 bankruptcy, an automatic stay immediately goes into effect. The automatic stay stops all collection activities including most wage garnishments. Wage garnishments to collect child and spousal support, however, do continue.
Read on to learn more about what a wage garnishment is and how filing a NJ bankruptcy can stop the garnishment.
What is Wage Garnishment?
When there is a court judgment against you, the creditor has a right to “garnish” your wage to collect their debt. This means that your creditor can get a court order requiring your employer to deduct a portion of your wages from your paycheck. The garnished wages are applied to pay the judgment debt. Your employer must comply with the wage garnishment order.
The wage garnishment will continue until the debt is paid off. With the help of a wage garnishment lawyer, filing for bankruptcy stops most wage garnishments and prevents creditors from getting new wage garnishment orders. This is because when you file NJ Chapter 7 or Chapter 13 bankruptcy an automatic stay is put into effect.
Wage Garnishments Can Be Devastating
The prospect of wage garnishment is serious and a court can garnish between 10% to 25% of your disposable income, depending on your income relative to the federal poverty index. Either way, having creditors take a large amount of your paycheck can make an already bad financial situation much worse. For many NJ families, wage garnishment is the beginning of the slide into financial ruin.
Fortunately, there are options and a New Jersey wage garnishment lawyer from Levitt and Slafkes, P.C. can help you find the best one for your family.
Don’t Wait to Seek Help From a NJ Wage Garnishment Lawyer
In order to garnish your wages for most debts, the creditor must get a Court order allowing them to do so. To get a Court order, the creditor must first file a lawsuit against you and get a judgment. This process takes time.
Bankruptcy Can Stop Your Wage Garnishment
If your wages have not yet been garnished, it is important to speak to a New Jersey bankruptcy lawyer noq before a wage garnishment order is issued. Filing a Chapter 7 or Chapter 13 bankruptcy stops most wage garnishments and prevents creditors from seeking new wage garnishment orders against you. In addition, a bankruptcy can eliminate most debts, such as credit card debt and medical bills, which can make it easier to meet your financial obligations going forward.
How Does The Automatic Stay Stop the Wage Garnishment?
If you file bankruptcy before the wage garnishment is issued, the automatic stay will stop the creditor from getting a wage garnishment order. Many people feel a wage garnishment puts them in a bad and embarrassing situation with their employer. This will not happen if a bankruptcy is filed before the wage garnishment is issued.
If your wages are already being garnished, an experienced bankruptcy attorney can still help you. Once a Chapter 7 or Chapter 13 bankruptcy is filed, the automatic stay will go into effect and stop the creditor from taking any more money from your paycheck. Also, the bankruptcy could likely eliminate the debt that caused the garnishment in the first place.
What Garnishments Won’t be Stopped by Bankruptcy?
If you file a Chapter 7 Bankruptcy and your debt is for a domestic support obligation, such as past-due child support or alimony, the automatic stay won’t stop the garnishment for this debt.
A Chapter 13 bankruptcy, on the other hand, will stop all garnishments, including those for domestic support obligations. This is because you must fully pay these obligations in your Chapter 13 bankruptcy Plan. Therefore, the garnishment will stop while you’re making your payments in the Chapter 13 bankruptcy.
NJ Bankruptcy Attorneys Levitt & Slafkes Can Help Stop Your Wage Garnishment
If you are facing wage garnishment in New Jersey, contact the experienced NJ bankruptcy attorneys at Levitt & Slafkes, P.C. We can help you understand how filing for bankruptcy can stop collection efforts and wage garnishments. We’ll also explain your options under Chapter 7 or Chapter 13 bankruptcy.
For over 30 years, the attorneys at Levitt & Slafkes, P.C. have successfully and compassionately guided our clients to a brighter financial future. To schedule a free consultation contact us by telephone at (973) 323-2953 or contact us online.
We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years. The information in this blog is for general information purposes only. Nothing should be taken as legal advice for any individual case or situation.