You’re dealing with overwhelming debt. Every month, it gets trickier and trickier to make ends meet. You’d like to repay what you owe but need your paycheck to cover housing, food, utilities, transportation, and other living expenses. Then, your creditors force the issue by garnishing your wages and taking money right out of your paycheck before it even hits your bank account. What can you do now?
In most cases, filing bankruptcy can stop your wages from being garnished, but you need legal advice to know for sure. Here is some general information about how bankruptcy interacts with wage garnishment. For more information, check out South Carolina bankruptcy attorney Ben Matthews’ podcast, Debt Sucks.
What is wage garnishment?
Wage garnishment is a legal procedure in which your employer is ordered to withhold a portion of your wages to pay a debt. Your employer is legally required to comply with the garnishment order and may face penalties if they don’t.
Most often, wage garnishment happens when a creditor goes to court and gets a judge to issue an order. The IRS and various other government agencies also have the power to garnish wages for debts owed to the government, including but not limited to unpaid taxes.
What happens to wage garnishment when I file bankruptcy?
When you file for bankruptcy, the court will immediately issue an “automatic stay” that puts a stop to all collection activities from most creditors. Since wage garnishment is a collection activity, the automatic stay applies.
There are some exceptions, however. The automatic stay can’t stop garnishment related to:
- Child support and alimony: These are considered “priority debts” that continue to be collected even after you file for bankruptcy.
- Certain tax debts: The IRS and other tax authorities may still continue to garnish your wages if you have unpaid taxes.
- Criminal fines and restitution: Garnishment related to court-ordered restitution, as well as fines and other criminal penalties, is not stopped by the automatic stay.
In addition, certain types of debt (such as most types of student loans) are difficult to discharge in bankruptcy. Garnishment for those types of loans will still be stopped by the automatic stay, but if the debt is not discharged, garnishment may resume after your bankruptcy case is resolved.
Note that it’s important to monitor your paychecks after filing bankruptcy to ensure that garnishment has been stopped by the automatic stay. If your employer continues garnishing your wages, notify them immediately.
If you’re facing wage garnishment, talk to a bankruptcy attorney
While bankruptcy isn’t a silver bullet that stops any and all garnishments, for most debtors, filing for bankruptcy will enable you to start keeping your whole paycheck again, which makes it much easier to keep up with your living expenses. Moreover, if you can get your debts discharged in bankruptcy, you’ll be able to get a fresh start financially, with the opportunity to rebuild your credit and build a more stable future.
Are you ready for a fresh start? Give us a call or contact us online to speak with a South Carolina bankruptcy attorney at Benjamin R. Matthews & Associates, LLC.
"First class from start to finish. Ben Matthews explained everything to the 't.' He made me feel comfortable and handled all the activities in a professional manner." – Ron G., ⭐⭐⭐⭐⭐