When people face financial difficulties, creditors may resort to wage garnishment to collect debts. This process involves deducting a portion of a person’s wages from his or her paycheck to satisfy outstanding debts.
Many wonder whether filing for bankruptcy can put an end to wage garnishment. Understanding the implications of bankruptcy on wage garnishment is helpful for anyone seeking relief from overwhelming debt burdens.
Bankruptcy and wage garnishment
Filing for bankruptcy can indeed halt wage garnishment, at least temporarily. When someone files for bankruptcy, an automatic stay goes into effect. This prohibits creditors from continuing collection efforts, including wage garnishment. This stay provides immediate relief to debtors by stopping wage garnishment while the bankruptcy case is ongoing. However, the automatic stay may not apply in all cases. It may also only provide temporary relief, depending on the type of bankruptcy and the specific circumstances of the debt.
Types of bankruptcy and wage garnishment
The impact of bankruptcy on wage garnishment can vary depending on the type of bankruptcy filed. Chapter 7 bankruptcy can temporarily halt wage garnishment through the automatic stay. However, Chapter 7 bankruptcy may not discharge certain debts, such as child support or alimony. These debts could still be subject to wage garnishment. On the other hand, Chapter 13 bankruptcy may provide a more permanent solution to wage garnishment by creating a repayment plan that allows debtors to catch up on past-due debts while keeping creditors at bay.
While filing for bankruptcy can offer relief from wage garnishment, it is important to weigh the benefits and consequences. Bankruptcy is a significant financial decision that may have long-term implications.