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What Is an Automatic Stay in a Texas Bankruptcy?

April 30th, 2020 at 1:24 am

TX bankruptcy lawyer, Texas chapter 13 lawyer, Texas chapter 7 lawyer, For most people, filing for bankruptcy is a last resort. It can be easy to dig yourself into a pit of debt that you are unable to climb out of. Once the bills start becoming due, it can feel like an ocean wave washing over you, with you struggling to stay above water. Not paying your bills can cause creditors to resort to collections actions, such as wage garnishment and repossession. Once you file for bankruptcy, however, all of those collections actions must stop. This is what is known as the automatic stay.

Understanding the Automatic Stay

The automatic stay is a provision in the U.S. Bankruptcy Code that temporarily halts collections attempts from all creditors. The automatic stay goes into effect immediately after you file for bankruptcy and prevents any and all creditors from contacting you about debts you may have with them. The automatic stay does not last forever. As soon as your bankruptcy case is finished, the automatic stay is lifted.

What Can the Automatic Stay Prevent?

The automatic stay is meant to stop creditors from performing a variety of collections activities while you are going through with your bankruptcy. This was meant to help keep things fair among creditors, to prevent one creditor from settling their debts over another, but it also helps the person filing for the bankruptcy. Here are a few things the automatic stay can prevent from happening:

  • Foreclosure or eviction: The automatic stay prevents the completion of a foreclosure on your home or eviction from a place you rent. However, the automatic stay does not prevent foreclosure or eviction from happening. Your creditor can file a petition for the foreclosure to proceed, and mortgage debt is not discharged with a Chapter 7 bankruptcy, leaving you still responsible after the bankruptcy is over.
  • Wage garnishments: If you have had creditors garnish your wages, they are not permitted to do so during the time that the bankruptcy case is open. You should be receiving your full wages once the automatic stay is in place, as long as the garnishment is not for secured debt.
  • Repossessions: The automatic stay can also help prevent repossessions from happening on property that you do not fully owe yet, such as vehicles. Auto debt is also not discharged in Chapter 7 bankruptcies, which is why you must work out a repayment plan with your lender. As soon as the bankruptcy is over, your lender can repossess your vehicle if you have not worked out a repayment plan.

Our San Antonio, TX Bankruptcy Attorney is Here to Help

In some situations, creditors can be aggressive and intrusive into your life. If you have filed for bankruptcy, you should not be experiencing any collections actions against you. If you have creditors who are still trying to collect, you should speak with a skilled Boerne, TX bankruptcy lawyer. At the Law Offices of Chance M. McGhee, we can help you through your bankruptcy case. To schedule a free consultation, call our office today at 210-342-3400.

 

Sources:

https://www.investopedia.com/terms/a/automaticstay.asp

https://upsolve.org/learn/what-is-automatic-stay-bankruptcy/

The Basics of Texas Wage Garnishment and Bankruptcy

September 30th, 2019 at 9:58 am

garnishmentMost Americans have some form of debt. According to the latest figures from the Federal Reserve, consumer debt amongst Americans has reached $4.1 trillion. While many people successfully manage their debt through careful budgeting and conservative spending, there are some who are in over their heads. Not paying your debts as you should be paying them can result in consequences. Debtors will try almost anything to get the money that you owe them, including something called wage garnishment.

What Is Wage Garnishment?

If you are legally obligated to pay back a debt, you must do so or face consequences. One of those consequences is wage garnishment. A wage garnishment, or wage attachment, is a court order that a creditor or lender sends to your employer. The order instructs your employer to withhold a certain amount of money from your paycheck and send it directly to your lender. Federal wage garnishment laws apply, but wage garnishment laws in Texas are slightly different.

Texas Wage Garnishment Laws

Unlike many states, Texas is rather strict when it comes to wage garnishments. In Texas, most lenders are unable to garnish your wages for unpaid debts. The only debts that qualify for wage garnishment in Texas include:

  • Unpaid taxes or fines
  • Unpaid child support or alimony
  • Unpaid student loans that have been declared to be in default

Texas laws state that your wages are part of your “personal property exemption” when it comes to creditors’ claims, meaning a creditor does not have a right to your wages, even if you owe them money.

Wage Garnishment and Bankruptcy

If you are experiencing wage garnishments, you may want to consider filing for bankruptcy. A Chapter 7 bankruptcy is the only type of bankruptcy that can stop wage garnishments once the automatic stay is put into place. The bankruptcy can also help you to get back on your feet financially and use your funds that have been freed up to pay some of your other debts that do qualify for wage garnishment, like taxes or child support.

Talk With a San Antonio, TX Bankruptcy Attorney About Your Options for Relief

Wage garnishments can be devastating for some people. In some cases, bankruptcy might be your best option if you are experiencing wage garnishment. The smartest thing you can do is to get in touch with a skilled New Braunfels, TX wage garnishment defense lawyer to discuss your situation and figure out what your next step should be. At the Law Offices of Chance M. McGhee, we understand how wage garnishments can affect your livelihood. Call our office today at 210-342-3400 to schedule a free consultation.

 

Sources:

https://www.federalreserve.gov/releases/g19/current/

https://statutes.capitol.texas.gov/Docs/PR/htm/PR.42.htm

Preventing Wage Garnishment through Bankruptcy

January 26th, 2018 at 8:00 am

Filing bankruptcy protects your paycheck. It does so because federal bankruptcy prevents a state court wage garnishment order.

 

Last time we got into how hiring a lawyer can stop a creditor from suing you. Sometimes it can also stop a creditor which has already sued from getting a judgment against you.

But these work mostly for practical reasons, not legal ones. A creditor may not sue when you are about to file bankruptcy because it’s often a waste of time and effort to do so. It may hold off on taking a lawsuit to judgment when your lawyer is on the scene to oppose it. However, there is usually no legal reason stopping a creditor from proceeding.

So a creditor can, and sometimes will, sue you even if you’ve hired a bankruptcy lawyer. It can try to proceed with its lawsuit and get a judgment against you. One of the main reasons it would do so it that it wants to start garnishing your paycheck.

Filing bankruptcy virtually always prevents a garnishment from happening. That’s because your bankruptcy filing does make it illegal for your creditor to keep collecting the debt. 

Bankruptcy Prevents Wage Garnishments

Filing either a Chapter 7 “straight bankruptcy” or Chapter 13 “adjustment of debts” imposes the “automatic stay” on your creditors. The “automatic stay” forbids further collection of almost all your debts. (Some rare exceptions are criminal fines and restitution, and most child and spousal support.) This stopping of debt collection goes into effect the moment you file bankruptcy.

In particular, the automatic stay stops “the commencement or continuation” of a lawsuit against you on a debt. Section 362(a)(1) of the U.S. Bankruptcy Code. That means that once you file bankruptcy, creditors can’t start a lawsuit against you. A lawsuit that a creditor already filed can’t continue. 

Almost always creditors can’t garnish your paycheck until after first finishing and winning a lawsuit against you, getting a judgment in its favor, and then getting a wage garnishment court order for the purpose of collecting the judgment. So the bankruptcy prevents the lawsuit from turning into a judgment. And without a judgment the creditor can’t garnish your wages.

Bankruptcy Prevents Most Wage Garnishments Permanently

In preventing upcoming wage garnishments, bankruptcy does so permanently with the vast majority of debts. This happens when a debt is discharged (legally written off) in the bankruptcy case, as most debts are. Once a debt is discharged, an injunction is imposed against the collection of that debt ever again. That includes collection by any means, including garnishment. Section 524(a)(2) of the Bankruptcy Code. So the bankruptcy filing prevents wage garnishment on most debts, forever.

There are relatively rare situations when wage garnishment is only prevented temporarily. There are also some very limited situations when a wage garnishment is not prevented at all. We’ll get into these in the next couple blog posts.

 

Can Bankruptcy Stop Wage Garnishments?

April 17th, 2015 at 9:58 am

Texas bankruptcy lawyer, Texas chapter 7 attorney, filing for bankruptcy, debt collection, 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.

Understanding Wage Garnishment Laws in Texas

January 28th, 2015 at 5:43 pm

wage garnishment in San Antonio, Texas bankruptcy lawyerMost Americans have some form of debt, and many struggle to make payments. Some are fortunate enough to get by with responsible budgeting, consolidation, and other financial strategies. However, unexpected circumstances, such as a suffering an injury or losing a job, can cause a debtor to fall behind. In some cases, creditors will garnish a debtor’s income to pay debt.

Although wage garnishment can severely limit a person’s financial freedoms, certain requirements must be met in order for wage garnishments to be legal. This article will briefly discuss how wage garnishment laws work in Texas.

Texas Laws Regarding Garnished Wages

For citizens of Texas, creditors cannot garnish wages to pay consumer debt, according to NPR. However, debts involving taxes, student loans, alimony, and child support may lead to wage garnishment.

Also, whether or not the debtor was born in Texas may affect the creditor’s ability to garnish wages. There are other complexities to these laws, which is why the guidance of a bankruptcy lawyer may prove invaluable.

What to Do When Wage Garnishment Begins

When wage garnishment begins, it is important that the debtor remains in contact with all relevant parties. These include the creditor, collections agency, and any attorneys involved. Do not avoid phone calls from these parties.

Although it may seem embarrassing or uncomfortable for an employer to learn about your debt, employees cannot lose their jobs due to wage garnishment—provided this is the first time it has happened.

Filing for bankruptcy may be a smart option if you face wage garnishment. A bankruptcy attorney can assess the facts of your case to determine if this is the right decision.

If you wish to learn how bankruptcy might help you financial situation, contact an experienced San Antonio bankruptcy lawyer. The Law Offices of Chance M. McGhee may be able to help. For more than 20 years, Mr. McGhee has helped clients return to financial stability, and he may be able to do the same for you. To schedule a free consultation, call us at 210-342-3400.

 

Call today for a FREE Consultation

210-342-3400

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