Will filing bankruptcy stop wage garnishment?

Garnishment is No Fun

When a garnishment hits, it usually hits hard, with as much as 25% of a debtor’s monthly paycheck going directly to their creditors.

Bankruptcy Stops Wage Garnishment

Through the power of the automatic stay, filing for bankruptcy stops all creditor collection activity including foreclosure, lawsuits and wage garnishment. If your wages are currently being garnished, filing for bankruptcy will obligate your creditors to immediately stop taking money out of your paycheck. In fact, if a single creditor has garnished more than $600.00 in the 90 days before your bankruptcy case was filed, the creditor can be required to return the garnished money. Creditors who continue to garnish wages, after receiving notice of a bankruptcy, can be sued for sanctions and forced to return the improperly garnished funds.

Garnishment for Child Support Payments

Be aware that there are exceptions to this rule. Most notably, court ordered child support payments will not be disrupted by filing bankruptcy. Generally speaking, child and spousal support debts are not dischargeable in bankruptcy because of their high societal importance.

An Ounce of Prevention…

It should also be noted that a bankruptcy filing can prevent wage garnishment altogether. It is important to be ever vigilant in the battle against creditors. If you are served with a lawsuit, call a lawyer! As has been mentioned several times on this blog, when creditors sue, they are banking on a default judgment. In other words, they’re expecting you to ignore their collection activity. Taking proactive steps to either settle with your lender or file bankruptcy before a writ of garnishment issues will save you money and many sleepless nights.

Bottom line: bankruptcy will stop wage garnishment and don’t ignore collection activity. If you’ve been sued or threatened with litigation, call a lawyer.