Wage garnishments cause financial stress, making it hard to pay for daily living expenses. People struggling with overwhelming debt often wonder if filing for bankruptcy can stop wage garnishments. Understanding how bankruptcy works provides much-needed relief.
How bankruptcy stops wage garnishments
Filing for bankruptcy activates an automatic stay, which halts most collection actions, including wage garnishments. The automatic stay acts as a court order that prevents creditors from collecting debts during the bankruptcy process. Creditors stop garnishing wages as soon as a bankruptcy case is filed. The stay remains in effect while the bankruptcy case is active, giving debtors some breathing room.
The types of debts affected by bankruptcy
Bankruptcy stops wage garnishments for unsecured debts, like credit cards, medical bills, and personal loans. However, certain debts, such as child support, alimony, and some tax obligations, remain unaffected by the automatic stay. In these cases, wage garnishments continue even after filing for bankruptcy.
What happens after filing for bankruptcy?
After filing for bankruptcy, the debtor must notify their employer and the creditor’s attorney about the automatic stay. This notification prompts the garnishments to stop. Depending on the type of bankruptcy filed—Chapter 7 or Chapter 13—the outcome can vary. Chapter 7 helps discharge most unsecured debts entirely, ending garnishments permanently. Chapter 13 involves a repayment plan, which allows the debtor to repay debts over time with more manageable monthly payments.
Stopping wage garnishments is one of the benefits of filing for bankruptcy. It provides immediate relief and offers an opportunity to get finances back on track. Consulting with a professional helps determine a good path forward and ensures that all required steps are taken to stop wage garnishments effectively.
