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Bankruptcy Can Help End Wage Garnishment

On Behalf of | Dec 10, 2018 | Bankruptcy Automatic Stay, Bankruptcy Basics, Chapter 13 Bankruptcy

  • Creditors can be relentless and ruthless when it comes to collecting on debts. They use every tool at their disposal, including letters, phone calls, and social media harassment.

    Can Bankruptcy Stop a Wage Garnishment?

    Yes, filing a bankruptcy can stop a wage garnishment. Under the U.S. Bankruptcy Code, when a bankruptcy is filed, an automatic stay immediately goes into effect which 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 wage garnishment is and how it can be stopped with filing a NJ bankruptcy with the aid of a wage garnishment lawyer.

    What is Wage Garnishment?

    When there is a court judgment against you, the creditor has a right to “garnish” your wages. This means that the creditor can get a court order requiring your employer to deduct a portion of your wages from your paycheck to be applied to 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 garnishments orders. This is because when you file bankruptcy an automatic stay is put into effect.

    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 a significant chunk of your paycheck taken by creditors can really worsen an already bad financial situation.

    Wage Garnishments Can Be Devastating

    Creditors can be relentless and heartless when it comes to collecting money owed to them. They use every tool at their disposal, including letters, harassing phone calls and even social media harassment. This adds to the already stressful situation of being unable to pay your bills. Creditors can also use a wage garnishment to collect their debt. When you are struggling to pay living expenses it can be devastating for money to suddenly disappear from your paycheck.  

    If you are struggling with debt, a wage garnishment can make an already difficult situation much worse.  Fortunately, it’s not inevitable and there are steps you can take to prevent debt collectors from getting at your paycheck. These steps begin with a wage garnishment lawyer. 

    Wage garnishment is a devastating blow to anyone’s household budget. How are you going to cover housing, food, and utilities with the money left over? For many New Jersey 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 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 wage garnishment lawyer before a wage garnishment order is issued.  Filing for bankruptcy stops most wage garnishments and prevents creditors from seeking new wage garnishment orders against you.

    The Automatic Stay

    If you file bankruptcy before the wage garnishment is issued, the automatic stay will not allow the creditor to get a wage garnishment order. Therefore, your wages will not be garnished at all. 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 by a lawyer 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.  The automatic stay is triggered the moment you file for bankruptcy.  This means that once your Chapter 7 Bankruptcy or Chapter 13 Bankruptcy has been filed, you will start receiving your full paycheck again and possibly eliminate (discharge) 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 triggered by filing, won’t stop the garnishment for this debt.  

    A Chapter 13 bankruptcy 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. Your wage garnishment lawyer will be able to help you navigate these waters.

    NJ Bankruptcy Attorneys Levitt & Slafkes Can Help Stop  Your Wage Garnishment

    Wage garnishment is a big deal and can really damage your ability to make ends meet.  If your wages are being garnished, you need the help of an experienced NJ bankruptcy attorney.  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.  

    If you’ve received a notice of wage garnishment, or think one is coming and want to understand how NJ bankruptcy may help you, contact our wage garnishment lawyers for the answers you need.

    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.