Facing wage garnishment or tax levies is no doubt a harrowing and unpleasant experience. After wage garnishment, many often struggle to cover necessary living expenses — leaving them in an even more stressful and dire financial situation.
Not only can filing for bankruptcy stop most (not child support) types of wage garnishment, but it can also take care of other debts. Here are some ways bankruptcy may be a good option for those who are nearing wage garnishment.
How Does Garnishment Work?
There are two types of garnishment — wage garnishment and bank account garnishment. Here is how each one works:
- Wage Garnishment - A portion of your earned wages is removed to satisfy the amount owed to a creditor. State law puts a cap on the percentage of income an employer may hold back (no more than 25 percent of the gross in KS and MO).
- Bank Account Garnishment - Collection agencies can remove all funds in a checking account multiple times until the debt is satisfied.
In either instance above, by law, a creditor must win a judgment and a writ of garnishment before any funds can be removed from a debtors paycheck or checking account. Either type of garnishment can make it extremely difficult for individuals to make ends meet.
How Bankruptcy Can Help
Bankruptcy can nullify a host of debt collection actions, including garnishment. When an individual files for bankruptcy, the bankruptcy court issues an automatic stay which stops collection proceedings. Both Chapter 7 (liquidation) and Chapter 13 (reorganization) can stop wage garnishment.
What Type of Garnishment is Eligible for Bankruptcy?
Not all wage garnishments can be stopped by bankruptcy — for example, child support and alimony payments. Here are some common debt situations in which bankruptcy can stop wage garnishment for dischargeable debts:
- Credit card debt
- Medical bills
- Personal loans
- Utility bills
Having your wages garnished or being left with no money in your bank account can put an enormous amount of stress on you and your family. If you are up against wage garnishment Moore & Associates, LLC can help ease your financial burdens. Contact us at (913) 225-8330 for a free initial consultation today.