Can filing for bankruptcy stop a wage garnishment?

On Behalf of | Oct 10, 2022 | Bankruptcy |

Learning that you have a wage garnishment is traumatic because you count on the money that you earn to support yourself. Once you learn of this, your thoughts will likely turn to how to get it to stop so you can keep the money you need.

One option that might work for some cases is bankruptcy. If you’re considering this option, you need to look at all the ways it might impact you. There are a few things you need to remember if you’re trying to get a bankruptcy to stop a wage garnishment.

Issuance of an automatic stay

One of the benefits of filing for bankruptcy is the issuance of the automatic stay. This is an order by the court that prevents creditors from trying to collect money from you. Some wage garnishments are included in the automatic stay, so this might be the only thing that you have to do to get the garnishment lifted.

Automatic stays usually last until the bankruptcy case ends; however, there’s an important exception to this. If you’ve filed bankruptcy multiple times in one year, the stay may not be issued or it could be limited to only a 30-day period. This means that bankruptcy wouldn’t be an effective way to stop the wage garnishment.

Limitations of the automatic stay

There are some wage garnishments that bankruptcy won’t stop. These include ones that are for student loans and child support. Additionally, some tax debt wage garnishments won’t be lifted because of filing bankruptcy.

If you’re filing for a Chapter 7 bankruptcy, the debts that are being garnished from your wages must be classified as dischargeable. The debt will be discharged through the bankruptcy so you won’t have to worry about a garnishment on it again.

If you’re filing a Chapter 13 bankruptcy, the wage garnishment is lifted as long as you make the required payments that are part of the plan to pay debts over a three to five year period. Remember, the court may issue a wage garnishment order for the bankruptcy payments, but it should be manageable.

Anyone who’s facing a bankruptcy should ensure they understand how it will impact them. Working with someone who’s familiar with this process can help you ensure you’re making decisions in your best interests.