Can Bankruptcy Stop Wage Garnishments?

 Posted on April 17, 2015 in Chapter 7 bankruptcy

A wage garnishment is a court order that requires a debtor’s employer to pay a portion of the debtor’s wages to one or more creditors. Many people consider filing for bankruptcy in order to stop or prevent wage garnishment.

According to federal bankruptcy law, only a chapter 7 bankruptcy can stop a wage garnishment. During chapter 7 bankruptcy, the filer liquidates his or her assets to pay off debts, and the court issues an automatic stay.

This immediately stops wage garnishments, as well as all other debt-collection proceedings such as foreclosures or evictions. Chapter 7 bankruptcy will only put a stop to commercial wage garnishments, such as those related to credit cards, certain loans, and mortgages, but it will not stop garnishments for child support or delinquent taxes.

To qualify for chapter 7 bankruptcy, a person’s monthly income needs to be equal to or less than the state’s median household income. People whose salaries are above this median must pass a “means test.”

The means test determines whether a person has enough disposable income to repay the debt. If the filer has enough income, then chapter 7 bankruptcy is not an option. However, the debtor may be able to file for chapter 13 bankruptcy instead. Chapter 13 bankruptcy does not stop garnishments.

Filing for bankruptcy is a serious decision. However, it is a smart one in many cases. Bankruptcy may allow you to keep your home, car, and other property, but it may affect your credit rating and stay on your credit history for up to 10 years.

Should you choose to file for bankruptcy, your first step should be contacting a skilled San Antonio bankruptcy lawyer. Attorney Chance McGhee has more than 20 years of experience practicing law. He can explain how the bankruptcy process works and discuss your options. Call 210-342-3400 for assistance with chapter 7 or chapter 13 bankruptcy.