Should I Worry About Garnishment During Bankruptcy?

 Posted on January 08, 2024 in Wage Garnishment

Seeing wages diminish right on your paycheck because of creditors garnishing income can be devastating. Falling behind on unsecured debts like credit cards, medical bills, or personal loans leaves you vulnerable to court judgments, allowing the seizure of hard-earned pay. Does filing bankruptcy stop wage garnishments in their tracks? Understanding how these protections work can help with decisions when working with a Texas bankruptcy lawyer on using bankruptcy to halt creditor collection efforts.

Automatic Stay Halts Garnishment

A primary benefit of submitting a bankruptcy petition is triggering the “automatic stay,” putting your debt collection world on hold. This legal injunction prohibits creditors and collectors from pursuing amounts owed using calls, lawsuits, attachments, and other techniques during active bankruptcy. Importantly, the stay also instantly cuts off existing wage garnishments, deducting amounts straight from paychecks upon the bankruptcy filing. The stay helps shield income needed for fresh starts.

Duration of Automatic Stay Varies

While excellent wage garnishment relief initially, the automatic stay does not permanently block creditors from ever collecting again in every situation. Duration depends on the bankruptcy chapter filed:

• Chapter 7 - The stay protects you from 60 to 90 days until discharge, wiping debts, including garnishments.
• Chapter 13 - The stay lasts your 3 to 5-year structured repayment timeline under court protection.

Discharged Debts Cannot Renew Garnishment

The best outcome in eliminating worry over repeat wage seizure is completing Chapter 7 successfully to discharge or legally erase target debts. Once old credit card balances or personal loans get discharged, former creditors and collectors lack standing to renew garnishment over formerly owed amounts. Discharge makes bygone debts uncollectible.

Non-Discharged Debts May Resume Collection

However, some kinds of debt are excluded from bankruptcy discharge, like recent taxes, spousal and child support, student loans, legal judgments from drunk driving cases, court fines, and criminal restitution orders. Excluded debts remain legally owed, and wage garnishment may restart. Work closely with your bankruptcy attorney to understand the ramifications of non-discharged debts relevant to your situation before filing.

Contact a Kerrville, TX, Bankruptcy Lawyer

Using bankruptcy to halt imminent wage garnishment can provide the ability for financial recovery. Consult a New Braunfels, TX bankruptcy attorney to map optimal approaches leveraging bankruptcy’s automatic stay and debt discharge to prevent repeat income seizures long-term. Call Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation to get started towards potentially feeling a weight off your shoulder.