Struggling with debt can often go from manageable to a tailspin in a heartbeat. One of the most common ways this happens is when a creditor wins a judgment and is allowed to start garnishing your wages.
Millions of Americans live paycheck to paycheck, just barely keeping their heads above water. When a creditor begins taking money directly out of that paycheck, it becomes difficult to keep everything afloat.
Luckily, there is a legal option against aggressive creditors. Bankruptcy is designed to stop creditor collection efforts, including wage garnishment. If your paycheck is getting "hacked", talk to a lawyer today about your legal options:
Wage garnishment is often used by creditors that have no claim to property. For example, if you're behind on a mortgage, the bank may foreclose on your home and take it back; but without property to back up your credit card purchases or medical bills (for example), a creditor may file a motion in court asking for your wages to be garnished.
Depending on the amount of your debt, the court will assign a percentage of your paycheck to be automatically deducted and sent to the creditor. In some cases, wage garnishments may take more than half of your paycheck.
Each state has a limit on how much money can garnished, but often up to 25 percent of your disposable income could be taken. In cases of tax debt, much more could be taken out.
Yes. It’s possible that your paycheck could be used to payoff your husband or wife's debt.
Alternatively, that means your debts could also cause your spouse’s wages to be garnished.
In some states, debt and assets are shared by a married couple. In these cases, your spouse’s wages might be at stake even if the credit card and the debt are in your name (or vice versa).
Your employer will be aware of the court order allowing the wage garnishment.
They are required by law to comply with the order and will be unable to stop the garnishment of your wages.
You are also protected by the law, which says that an employer may not fire you because your wages are being garnished.
Wage garnishment may not follow you from job to job.
Each garnishment is a separate court order and must name a specific employer. However, any severance pay or bonus pay you receive may also be subject to garnishment.
Wage garnishment will usually only stop if:
In most cases, when you file bankruptcy you immediately receive the protection from the automatic stay. This is a powerful court order that puts a quick stop to all forms of collection for the duration of your case.
Wage garnishment, along with phone calls, letters, foreclosure and repossession, are all considered forms of collection.
Both Chapter 13 and Chapter 7 bankruptcy can stop wage garnishment.
In the case of a Chapter 13 bankruptcy, the garnishment will stop for several years as you work through your repayment plan. In a Chapter 7, each state’s exemptions provide protections against wage garnishment.
An attorney can listen to your individual case and determine whether you can file Chapter 7 or 13 to stop wage garnishment.
He or she can also explain how bankruptcy works and how it may affect your credit. Call now.