Can filing for bankruptcy stop wage garnishment?

On Behalf of | Mar 27, 2024 | Bankruptcy |

During challenging financial periods, individuals may encounter a situation where a portion of their earnings is withheld to pay off debts. This process, known as wage garnishment, can be a heavy burden and make it hard for them to meet their basic needs.

Many people wonder if filing for bankruptcy can stop this process and provide some relief. The answer lies in understanding the different types of bankruptcy and the impact they have on wage garnishment.

Chapter 7 bankruptcy

Chapter 7 bankruptcy involves selling off assets to repay debts. While it can wipe out many types of debt, certain obligations, such as child support, taxes and student loans, may remain. However, when someone files for Chapter 7, it triggers an automatic stay. This legal action temporarily stops most collection efforts, including wage garnishment and offers immediate relief.

Chapter 13 bankruptcy

By creating a plan to repay debts over several years, Chapter 13 bankruptcy offers a unique approach to financial restructuring. Unlike Chapter 7, it can potentially halt wage garnishment for a broader range of debts, even those not typically discharged under Chapter 7 bankruptcy. Upon filing, an automatic stay also kicks in, giving a break from wage garnishment while the repayment plan is set up.

After bankruptcy

While bankruptcy can provide relief from wage garnishment, it is not always a permanent fix. Some debts, such as taxes and student loans, may survive the process and continue garnishment afterward. Failing to follow the bankruptcy requirements can also result in the automatic stay getting lifted, allowing creditors to start garnishing wages again.

Before filing for bankruptcy, it is important to do your research and consider the long-term effects before making any decisions.