Adam Law Group Blog

Wage Garnishment and Bankruptcy

 

By the time many people decide to file for bankruptcy, their creditors have begun to attempt to obtain repayment on outstanding debts. In some cases, these debts are so large that the debtors are not able to continue making payments, which results in creditors seeking legal action. One of the most common ways that creditors attempt to collect what they are due is by garnishing debtors’ wages.

How Wage Garnishment Works

Wage garnishment occurs when a creditor obtains an order from a judge. A creditor must sue a person in court and obtain a judgment against the individual to become classified as a judgment creditor. After a judgment has been obtained, the creditor will then provide the garnishment order to the debtor’s employer, who will then be required to withhold a portion of the debtor’s earnings. This portion of the earnings will then be sent to the creditor directly.

Not All Parties Need to Obtain a Judgment

It might be surprising to learn, but there are a few types of creditors who are not required to obtain a judgment order against a person before wages can be garnished. Some of these creditors include agencies associated with child or spousal support, federal student loan collection agencies, and tax agencies.

How Bankruptcy Stops Wage Garnishment

When a person files for bankruptcy, an automatic stay is created that prohibits creditors from engaging in collection activities. During the bankruptcy process, a person will be required to provide a list of all of his or her creditors along with contact information for each creditor. The court will then inform the creditors that the individual has filed for bankruptcy. After being notified of pending bankruptcy, a person’s creditors are responsible for discontinuing wage garnishment efforts. If a person is able to discharge the debt through bankruptcy, creditors will no longer be able to engage in the wage garnishment activity. If the debt is not discharged through bankruptcy, the wage garnishment process will begin again after the bankruptcy process has ended.

Non-Bankruptcy Methods to End Wage Garnishment

There are other ways to end wage garnishment. It is always best to speak with an experienced bankruptcy attorney to determine if an option other than bankruptcy is the best possible choice. Some of the other methods that people use include relying on laws that restrict the amount creditors are allowed to garnish from a person’s wages, seeking help from debt counselors, and entering into a voluntary repayment plan.

Speak with an Experienced Bankruptcy Lawyer

Wage garnishment frequently causes debtors to experience a great degree of emotional stress and uncertainty. As a result, if you are considering pursuing bankruptcy or have concerns about wage garnishment, you should not hesitate to speak with an experienced bankruptcy lawyer. Contact the Adam Law Group today to schedule a free initial consultation.